An additional deduction of 20% will apply to eligible expenditure on external training courses provided to their employees incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2024 (subject to certain exclusions).
The additional deduction for eligible expenditure incurred on or before 30 June 2022 will be claimed in tax returns for the following income year (i.e. the 2023 financial year). The additional deduction for eligible expenditure incurred between 1 July 2022 and 30 June 2024 will be included in the tax return of the income year in which the expenditure is incurred.
Small Business – technology investment boost
To support digital adoption, small 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 (e.g. portable payment devices, cyber security systems or subscriptions to cloud-based services).
The additional deduction will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023. The expenditure eligible for the boost will be capped at $100,000 per annum.
The additional deduction for eligible expenditure incurred on or before 30 June 2022 will be claimed in the tax return for the following income year (i.e. the 2023 financial year). The additional deduction for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the tax return of the income year in which the expenditure incurred.
PAYG instalment system
From 1 January 2024, companies will have the option to calculate their PAYG instalments based on the current financial performance of their business.
Currently, PAYG instalment rates and amounts are calculated based on the company’s most recent income tax return.
This measure is designed to support companies in managing their cash flows, by aligning the business’ PAYG instalment liabilities with its real-time profitability.
The Government intends to undertake a consultation process to finalise the design and specifications of this measure, with systems to be in place by 31 December 2023.
Varying GDP uplift on PAYG and GST instalments
Small to medium businesses will benefit from a reduction in the uplift rate that applies to Pay-As-You-Go (“PAYG”) instalments and GST instalments.
Businesses with annual aggregated turnover of up to $10 million for GST instalments, and annual aggregated turnover of up to $50 million for PAYG instalments, will have a GDP uplift factor set at 2% for the relevant instalments in the 2022-23 income year. This represents a reduction in the GDP uplift factor from 10%, that would have otherwise applied under the statutory formula.
The 2% uplift rate will apply to PAYG instalments and GST instalments that fall due after the legislation receives Royal Assent.
Storm and flood incentives – tax treatment of qualifying grants
Income tax exemption will be provided to small businesses and primary producers who received qualifying grants following the storms and floods in Australia.
Qualifying grants exempt from income tax are Category D grants provided under the Disaster Recovery Funding Arrangements 2018, where the grants specifically relate to the storms and floods in Australia that occurred due to rainfall events between 19 February 2021 and 31 March 2021.
The small business recovery grants of up to $50,000 and primary producer recovery grants of up to $75,000 are grants eligible for income tax exemption under this measure.
These grants will be treated as non-assessable non-exempt income for tax purposes.
Fuel and alcohol excise reporting
From 1 July 2023, fuel and alcohol businesses with an annual turnover of less than $50 million will be able to lodge and pay excise and excise-equivalent customs duty on a quarterly basis.
The new measure will require fuel and alcohol businesses to lodge and pay the quarterly returns by the 28th day of the month after the end of each quarter. Fuel and alcohol businesses are currently reporting on a weekly or monthly basis.
The measure has been introduced to streamline the administration of fuel and alcohol excise and excise-equivalent customs goods.
Deregulation Measures
Reform and deregulation of Australia’s regulatory environment is a key focus of the Government in the 2022-23 Budget.
Of significance to small and medium businesses is the forgoing of $64.9 million over 3 years to streamline fees associated with Australia’s Business Registers. The deregulation measures are proposed to apply from the 2023-24 income year and will:
- Remove annual late review fees for companies;
- Reduce the number of fees paid for ad hoc lodgements under the current requirements; and
- Remove fees for searches conducted on the new registry website.
Other deregulation measures generally applicable to small to medium businesses include:
- Providing $11.2 million in funding over 5 years from the 2021-22 income year to continue work in reducing the regulatory burden for businesses that arises from compliance with mandatory safety and information standards under Australian Consumer Law;
- Forgoing $6.9 million in receipts over 4 years to make permanent the temporary tariff concession that is currently in place for certain medical and hygiene products to treat, diagnose or prevent the spread of COVID-19. Specifically, the measure will expand the range of products to which the concession currently applies and will remove the end-use restriction. This measure is to apply from 1 July 2022.
From 1 July 2023, the Government is providing further deregulation benefits to fuel and alcohol businesses.