Business tax announcements from Federal Budget 2022-23
30 March 2022
Make no mistake this is an election year Budget with no real losers and more importantly no vote losing announcements. In the Federal Budget 2022-23, the Government has put a heavy emphasis on infrastructure spend and support for business along with a few vote catchers.
A short term (six month) 50% reduction in fuel excise on all fuel and petroleum-based products (excluding aviation fuels) is certainly a vote catcher and targeted at the consumer. For businesses, there may be some saving, but it will be somewhat dampened due to the expected reduction in the fuel tax credit rebate in line with the fuel excise reduction.
Small business tax relief
The Budget included two short term initiatives/boosts for small businesses (<$50M turnover) by providing an extra 20% deduction on expenditure for:
Technology Investment Boost: the cost of business expenditure and depreciable assets purchases to support digital adoption, including portable payment devices, cyber security systems, accounting and e-invoicing software and web page design. Eligible expenditure will need to be incurred before 30 June 2023, with an annual cap $100,000.
Skills and Training Boost: for external training provided to employees in Australia by an entity registered in Australia. Eligible expenditure will need to be incurred before 30 June 2024.
This means for every $100 spend, you will be eligible to claim $120 as a deduction. Under both initiatives, the bonus deduction for expenditure incurred since the announcement and prior to 30 June 2022 will be claimable in the 2022/23 tax year, otherwise it is claimable in the year incurred.
Rebuilding and transforming our manufacturing capabilities has been an initiative of the Government’s and in line with this they have announced additional funding to: transform our manufacturing capability.
An additional $328.3 million over five years has been allocated to further support the Modern Manufacturing Strategy and National Manufacturing Priorities (NMP) and address critical supply chain vulnerabilities and includes:
$250 million to extend support to businesses in NMP sectors to deliver high-impact projects.
$53.9 million over four years to support technology adoption in NMP.
$6.9 million over two years to develop Manufacturing Investment Plans to guide government and industry investment in NMPs.
Some employer support was included in the Budget aimed at rectifying the skills shortage and included:
Apprentice wage subsidy support extended by three months until 30 June 2022.
Work and Holiday visas caps increased by 30 per cent in 2022-23.
Redistribution of 10,000 places in the 2021-22 Migration Program to increase the Skill stream ceiling from 79,600 to 89,600.
Skills and Training boost
Simplified business reporting
The Budget announced several initiatives to reduce red tape and simplify business reporting requirements. One of these initiatives is the development of IT infrastructure that will allow Single Touch Payroll (STP) data to be shared with states and territories facilitating the prefilling of payroll tax returns and improving compliance.
Funding for this measure has already been provided for by the Federal Government with trials in place with a number of State and Territory Governments in relation to the use of STP data. The Federal Government is on track to complete its IT system implementation by late 2023.
The funding will be deployed following further consideration of which State and Territory Revenue Offices are able and willing to make investment in their own systems and administrative processes to pre-fill payroll tax returns with STP data.
The Federal Government expects this initiative will improve lodgement accuracy, reduce compliance costs and save time for approximately 170,000 businesses with payroll tax reporting obligations.
However, we believe that employers will still need to be able to verify the accuracy of the information being lodged with the State and Territory Revenue Offices using STP data. Where the payroll tax lodgement values differ from the STP data this may lead to a new compliance focus for the State and Territory Revenue Offices.
Other areas of simplified reporting this Budget addresses include:
Taxable payments and annual reporting (TPAR) system data: from 1 January 2024, businesses will be able to choose to provide the data on the same lodgement cycle as their activity statements, via accounting software.
PAYG (Pay As You Go) instalments option: from 1 January 2023, companies will be able to choose to have their PAYG instalments based on current financial performance as extracted from their accounting software.
Employee share schemes: company law changes to expand access to employee share schemes for unlisted companies by increasing the investment threshold to $30,000 per participant per year (for unexercised options accruable up to five years ) plus 70% of dividends and cash bonuses or any amount if it would allow them to immediately take advantage of a planned sale or listing to sell their purchased interest at a profit. Regulatory requirements will also be relaxed for offers to independent contractors where they do not pay for their interests.
Company registration system to be modernised: including removal of company annual late fee review and reduced several ad Hoc lodgement and search fees.
Aligning the excise and other reporting requirements: lodge and pay quarterly (excise and customs duty) for fuel and alcohol businesses with a turnover less than $50M. Streamline and align licensing requirements and remove annual renewal requirements and fees, removing double taxation by the introduction of a customs refund system, introduction of a limited and targeted exemption from excise licensing requirements for license hospitality venues for filling small beer containers.
COVID-19 test expenses
The costs of taking a COVID-19 test to attend a place of work are tax deductible for individuals from 1 July 2021. In making these costs tax deductible, the Government will also ensure fringe benefits tax (FBT) will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose under the otherwise deductible rule.
Integrity measure announcement
The Budget has allocated funding for a reform of insolvency arrangements including such things as:
Implementation of reforms to unfair preference rules, including enhancing the Assetless Administration Fund.
Clarify the treatment of trusts with corporate trustees under Australia’s insolvency Laws.
Implement the Government’s response to the recommendations of the Independent Safe Harbour Review.
Some of the announcements are scant on detail and as always, the devil is in the detail.
Check out the full coveragefrom the Federal Budget 2022-23, which will continue to develop throughout the week as new insights and video content are published.