Federal Budget Report 2022 – What you need to know
Treasurer Josh Frydenberg delivered the Government’s annual Federal Budget address, announcing a broad range of measures aimed at addressing the cost of living and accelerating our economic recovery out of the pandemic slump.Posted: April 4, 2022
7 (more) key Budget measures businesses should know about
- Fuel excise halved for six months
- Cost of living pressures addressed
- Regional communications are on the agenda
- Reporting to the ATO is becoming more streamlined
- PAYG will be modernised by 2024
- Some COVID grants become non-assessable, non-exempt to 30 June 2022
- Childcare and mental health gain targeted spending
Temporary halving of fuel excise to fight rising costs
The Government has confirmed the petrol and diesel excise will be slashed by half for six months,
“For the next six months, Australians will save 22 cents a litre every time they fill up their car,” Frydenberg announced.
“A family with two cars who fill up once a week could save around $30 a week or around $700 over the next six months.”
The cut to the fuel excise takes effect tonight and is expected to begin impacting the cost of petrol in the next fortnight, without impacting costs to funding and maintaining roads.
Further encouragement of consumer spending
A number of initiatives have been announced to reduce the cost of living pressures, which will in turn have an impact on consumers’ spending ability – likely to be welcome news for businesses of all sizes.
• $420 one-off tax offset for over 10 million low-and-middle income earners
• Expansion of the low and middle income tax offset of $1500 for singles and $3000 for couples from 1 July 2022
• $250 ‘Cost of Living Payment’ to be delivered within weeks to six million ‘pensioners, carers, veterans, job seekers, eligible self-funded retirees and concession card holders’
“Together, with existing indexation arrangements, this will see a single pensioner receive more than $500 in additional support over the next six months, just when they need it most,” the Treasurer said.
The cost of living payment will be exempt from tax and will not count towards an individual’s income for social security income test purposes.
The payment will cover individuals in receipt of the age pension, disability support pension, parenting payment, carer payment, carer allowance, JobSeeker payment, youth allowance, Austudy and Abstudy living allowance, double orphan pension, special benefit, farm household allowance and eligible Veterans’ Affairs payments.
The payment will also go to individuals who hold a Pensioner concession card, a Commonwealth seniors health card or a Veteran Gold card.
However, if an individual receives multiple pensions or allowances, they will only receive the one-off payment once.
$1.3 billion for regional communications
The government is spending $480 million on the National Broadband Network in what is likely to spell great news for regional investment, as well as the delivery of products and services online.
Up to one million households and businesses in regional, rural and remote Australia will have access to higher speeds on NBN fixed wireless services or greater data limits on Sky Muster services.
The measure comes as part of the Treasurer’s announcement to deliver “a new $1.3 billion telecommunications package to expand mobile coverage across 8,000 kilometres of regional transport routes.”
The package also includes $811.8 million over five years to expand mobile coverage, connectivity, resilience and affordability in regional Australia.
There’s also a review into mobile tower access fees that will cost $1.8 million to deliver.
Smarter reporting for TPAR, trust incomes
The Taxable Payments Reporting System looks set for an overhaul and businesses will now have the option to report it via their accounting software on the same lodgment cycle as their Business Activity Statements.
While the Government says systems will be in place to support this by 31 December 2023 and will commence on 1 January 2024, few systems are already prepared to make this change, which aims to increase the accuracy and timeliness of reporting while lowering the compliance cost to businesses.
Similarly, the digitisation of trust and beneficiary income reporting and processing has also been announced, allowing all trust tax return filers the option to lodge income tax returns electronically, so increasing pre-filling of data and assisting the automation of ATO assurance.
Modernisation of PAYG instalment systems
Companies that choose to have Pay As You Go (PAYG) instalments calculated on current financial performance will be able to have the information extracted from their accounting software with some tax adjustments.
The move provides incentive for small business to digitise their accounting to reduce set PAYG tax for reduced business performance each BAS quarter.
While the Government is still to consult with impacted stakeholders, including tax practitioners and digital service providers, the intention is to have this measure take effect by 1 January 2024.
COVID business grants to become non-assessable, non-exempt
This announcement will enable payments from certain State and Territory business support programs to be made non-assessable and non-exempt for income tax purposes until 30 June this year.
Eligibility is limited to grant programs directed at businesses impacted directly by public health directives and were significantly disrupted as a result, and includes the following:
- NSW Accommodation Support Grant, Commercial Landlord Hardship Grant, Performing Arts Relaunch Package, Festival Relaunch Package, 2022 Small Business Supports Program
- QLD COVID-19 2021 Business Support Grant
- SA COVID-19 Tourism and Hospitality Support Grant, and COVID-19 Business Hardship Grant
Childcare and mental health investment
The Government announced $19.4 million in spending over the next five years to support the establishment of new childcare services in rural, remote and regional areas where there is limited supply of existing childcare services.
A critical factor for any employer of parents, childcare funding is seen as absolutely critical for the availability of workers and in this sense, every little bit helps. However, we can expect business owners are probably looking for more funding in this direction.
Another key issue for worker support mental health spending includes specific measures to support mental health for adults and children in flood affected regions.
This is an important recognition of the recent challenges faced by Australians, and it is something that we know impacts both small and large businesses, their managers and their operations.
Further points to consider:
The Government has extended the 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023.
The minimum drawdown requirements determine the minimum amount of a pension that a retiree has to draw from their superannuation in order to qualify for tax concessions. Given ongoing volatility, this change will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.
Data sharing of payroll data
The Government will facilitate sharing by the ATO of single touch payroll data with State and Territory governments on an ongoing basis to cater for pre-filling of payroll tax returns. The Government expects to complete its IT system implementation by late 2023.
Skills and training boost
Small 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 be delivered by entities registered in Australia.
The boost will apply to eligible expenditure incurred from 7.30 pm on 29 March 2022 (Budget night) until 30 June 2024. 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
A technology investment boost will be introduced to support digital adoption by small businesses. The boost will apply to eligible expenditure incurred from 7.30 pm on Budget night until 30 June 2023.
Small and medium businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, e Invoicing, 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.
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. This measure appears to be in line with the Government’s broader consultation from earlier in 2022 relating to introducing a business e invoicing right and moving businesses to the digital economy.
Extension of tax avoidance taskforce
The Government will provide over $650 million in 2023-24 and 2024-25 to the ATO to extend the operation of the Tax Avoidance Taskforce by two years to 30 June 2025. This measure is estimated to increase receipts by $2.1 billion over the forward estimates period.
Foreign investment framework
The foreign investment framework will be amended to streamline the requirement for some investors to notify the Government before acquiring an interest, while still maintaining the Government’s ability to address national interest concerns as they arise. These amendments are due to commence on 1 April 2022.
Work-related COVID-19 tests tax deductible from 1 July 2021
Costs of taking a COVID-19 test to attend a place of work will be tax deductible for individuals and exempt from fringe benefits tax from 1 July 2021.
Legislation will be introduced to clarify that work-related COVID-19 test expenses incurred by individuals are tax deductible. Employers will not incur fringe benefits tax if they provide COVID-19 testing to their employees for work-related purposes.
The amendments will take effect from the beginning of the 2021–22 tax year.
Paid Parental Leave scheme enhancements
The Paid Parental Leave scheme will be overhauled by combining the current Parental Leave Payment (18 weeks paid leave for the primary carer) and the Dad and Partner leave payment (2 weeks paid leave) into a single combined Paid Parental Leave pay scheme of up to 20 weeks.
Leave will be fully flexible and both parents will be able to choose how they split the leave periods between themselves.
The Paid Parental Leave can be taken any time within 2 years of the birth or adoption of their child.
The income test will also be broadened to have an additional household income eligibility test.
Apprenticeship wage subsidy extended
The Boosting Apprenticeship Commencements wage subsidy will be extended to support businesses and Group Training Organisations that take on new apprentices and trainees. The subsidy will now be available to 30 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 trainee’s wages of up to $7,000 per quarter for 12 months.
Business registry fees to be streamlined
Fees associated with Australia’s business registers will be streamlined over 3 years from 2023–24.
Company registration and lifecycle management are scheduled to move to a modernised platform in September 2023. These reforms to Australia’s business registers will:
- remove the companies annual late review fee
- reduce the number of fees paid for ad hoc lodgments under existing requirements
- remove fees for searches conducted on the new platform, and
- provide $300,000 to the Department of Treasury to redesign wholesale business register search services facilitated by third-party services.
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