Budget placates small businesses with visa changes and tax breaks, but misses opportunities to attract and retain talent
31 March 2022 | Minutes to read: 2

Budget placates small businesses with visa changes and tax breaks, but misses opportunities to attract and retain talent

By William Buck

William Buck welcomes this year’s Federal Budget measures to address an unprecedented workforce shortage and boost digitisation but said the Coalition has missed significant opportunities to help Australian businesses attract and retain talent.

Greg Travers, Director, Tax Services at leading mid-tier accounting and advisory firm William Buck, said that changes to visa programs could address workforce shortages and ease the pressure felt by stretched businesses, but that visa applications will need to be processed quickly and skilled migration should not be restricted to a limited number of industries.

“Increased skilled migration and working holiday visas are two measures that can have a relatively immediate positive impact on the workforce shortages,” said Mr Travers.

“Quick processing of visa applications is important and with businesses across the board feeling the strain of the current workforce shortages, skilled migration should not necessarily be restricted to certain sectors.”

Small businesses will also benefit from tax breaks to incentivise employee training and increase digitisation. For every $100 a small business spends on external training courses provided to their employees, they will be eligible to receive a 120% deduction. Similarly, they will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption.

However, while supporting businesses to train their employees and expand their skills is a proven way to fill skills shortages and help employees transition into new roles, Greg Travers is concerned about the limited extent of the support.

“As businesses increasingly digitise, training their employees is going to become critical, particularly for those employees that aren’t digital natives,” said Mr Travers.

“The Government’s Technology Investment Boost is budgeted to deliver approximately $25,000 in tax savings to a small business while the Skills and Training Boost is budgeted to deliver less than half of that amount.

“This is not a lot of support for a small business and seems like a missed opportunity.”

Mr Travers said the Government could have improved its support for small business by investing in technology to assist flexible working arrangements – particularly against a backdrop of fluctuating COVID-19 infection rates and a workforce demanding flexibility after demonstrating the effectiveness of working from home throughout the pandemic. However, the Government is completely silent on this.

“Flexible working arrangements are front of mind for every business, and for those facing workforce shortages, flexibility opens up opportunities for a much broader range of potential employees.

However, for flexible working arrangements to operate effectively, Mr Travers said a reasonable investment in technology is required. Investment for example could go towards setting the employee up with the right technology and working environment in their home.

“The Government missed an opportunity to support private businesses implementing flexible working arrangements. The existing tax system is designed for office-based working and actually penalises employers that give their employees additional support to facilitate flexible working. That seems like an area that is crying out for change.” said Mr Travers.

While this Budget demonstrates that the Government recognises the increasing digitisation of businesses and the widespread workforce shortages, it’s unfortunate that it has failed to see how the two connect.

“That the Government is silent on support for flexible working arrangements is disappointing. Despite the welcomed tax breaks, the Government has missed a vital opportunity to make any real reform to the current tax system – one which is not conducive to the new ways of working.”

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