2022/23 Federal Budget: Changes affecting business taxpayers.

Below is a summary of matters handed down in the Federal Budget on Tuesday 29th March 2022 which impact on businesses.  These are all proposals and will still need to be passed by the Senate.  We will keep you posted when/if relevant legislation is passed by the Senate and of any changes.

Skills and training boost

The Government will introduce a skills and training boost to support small and medium-sized businesses to train and upskill their employees. The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (i.e., Budget night) until 30 June 2024.

Small and medium-sized businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees. The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia.

Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees.

For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2024, the boost will be claimed in the income year in which the expenditure is incurred.

Apprenticeship Wage Subsidy Extended

The Boosting Apprenticeship Commencements wage subsidy will be extended to support business and group training organisations to take on new apprentices and trainees. The subsidy will now be available to 30th June 2022. This measure will provide for an additional 35,000 apprentices and trainees. Eligible businesses will be reimbursed up to 50% of an apprentice or trainees wages of up to $7,000 per quarter for 12 months.

Technology investment boost

The Government will introduce a technology investment boost to support digital adoption by small and medium-sized businesses. The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (i.e., Budget night) until 30 June 2023.

Small and medium-sized businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on business expenses and depreciating assets that support their digital adoption (such as portable payment devices, cyber security systems or subscriptions to cloud-based services).

An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost. This equates to a maximum additional deduction of $20,000 per eligible year.

For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2023, the boost will be claimed in the income year in which the expenditure is incurred

Modernising the PAYG instalment system

The Government will enable companies to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments. This will support business cash flow by ensuring instalments reflect current performance.

Subject to advice from software providers about their capacity to deliver, it is anticipated that systems will be in place by 31 December 2023, with the measure to commence on 1 January 2024, for application to periods starting on or after that date.

If revenue declines, they may be able to obtain automatic instalment refunds. This will take effect from 1 January 2024. Additionally, the GDP uplift rate that applies an annual increase to PAYG and GST instalments will be reduced from 10 percent to 2 percent for the 2022-23 income year.

Varying the GDP uplift factor for tax instalments

The Government has decided to set the GDP uplift factor for PAYG and GST instalments at 2% for the 2023 income year. This uplift factor is lower than the 10% that would have applied under the statutory formula.

The lower uplift rate will provide cash flow support to small businesses, including sole traders and other individuals with investment income.

The 2% GDP uplift rate will apply to small to medium enterprises eligible to use the relevant instalment methods (i.e., up to $10 million annual aggregated turnover for GST instalments and $50 million annual aggregated turnover for PAYG instalments) in respect of instalments that relate to the 2023 income year and fall due after the enabling legislation receives Royal Assent.

Reporting of Taxable Payments Reporting System data

The Government will provide businesses with the option to report Taxable Payments Reporting System data (via accounting software) on the same lodgment cycle as their activity statements.

Subject to advice from software providers about their capacity to deliver, it is anticipated that systems will be in place by 31 December 2023, with the measure to commence on 1 January 2024, for application to periods starting on or after that date.

Sharing of Single Touch Payroll (‘STP’) data

The Government has committed to the development of IT infrastructure required to allow the ATO to share STP data with State and Territory Revenue Offices on an ongoing basis.

Funding for this measure has already been provided and will be deployed following consideration of which States and Territories are able, and willing, to make investments in their own systems and administrative processes to pre-fill payroll tax returns with STP data.

Small Business Support Package

The Government will provide funding over three years from 2021/22 to deliver initiatives to support small businesses, including:

• $10.4 million over two years from 2022/23 to enhance and redesign the Payment Times

• Reporting Portal and Register to improve efficiency and reporting;

• $8.0 million in 2022/23 to the Australian Small Business and Family Enterprise Ombudsman to work with service providers to enhance small business financial capability;

• $4.6 million over two years from 2021/22 to support the New Access for Small Business Owners program delivered by Beyond Blue to continue to provide free, accessible, and tailored mental health support to small business owners; and

• $2.1 million over two years from 2021/22 to extend the Small Business Debt Helpline program operated by Financial Counselling Australia to continue to provide financial counselling to small businesses facing financial issues.

Digitalising trust income reporting and processing

The Government will digitise trust and beneficiary income reporting and processing by allowing all trust return filers the option to lodge income tax returns electronically, increasing pre-filling and automating ATO assurance processes.

This measure acknowledges that trust income reporting has not been automated to the same extent as individual and company tax returns. This measure will reduce the compliance burden, reduce processing times, and enhance ATO processes.

This measure is proposed to commence from 1 July 2024, subject to advice from software providers about their capacity to deliver.

Should you require any further information regarding these announcements please don’t hesitate to contact this office.