30 March 2022

Australian small businesses are resilient and on the road to recovery, but current world events, floods and risks due to the ongoing pandemic and inflation could significantly impact growth. To mitigate those risks and to capitalise on the recovery, small businesses have been encouraged by the Government to invest in new technologies and to train their labour force.

Skills and Training Boost

Small businesses will have access to a new 20 percent bonus deduction for eligible external training courses for upskilling employees. The Skills and Training Boost will apply to expenditure incurred from Budget night until 30 June 2024, providing $550 million in tax relief. Some exclusions will apply, such as for in-house or on-the-job training.

A point to note is that the boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2024 will be included in the income year in which the expenditure is incurred.

Technology Investment Boost

In the Federal Budget 2022-23, the Government is allocating $1 billion for a new Technology Investment Boost to encourage small businesses to go digital. Small businesses with annual turnover less than $50 million will be able to deduct a bonus 20 percent of the cost of expenses and depreciating assets that support digital uptake. This includes portable payment devices, cyber security systems or subscriptions to cloud-based services. The boost will apply to eligible expenditure of up to $100,000 per year, incurred from Budget night until 30 June 2023.

It is important to consider that the boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the income year in which the expenditure is incurred.

Other measures announced in the Budget

COVID-19 grants

The Government has extended the measure which enables payments from certain State and Territory COVID-19 business support programs to be made non-assessable non-exempt for income tax purposes until 30 June 2022.

New PAYG instalment calculation option

Companies will be allowed to calculate PAYG instalments based on financial performance. If financial performance declines, companies may be able to get refunds of instalments paid automatically. It is expected that the new systems to implement this measure will be ready for implementation by 1 January 2024.

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.