Federal Budget, would you like to phone a tax friend?
Innovate, Create and Cuts to the Excise Rate
However, there is little in the way of innovation and creation in the 2022-23 Federal Budget within the Australian tax system. The Government has announced some exciting measures for small and medium businesses with an annual turnover of less than $50m. Businesses will be allowed an additional 20% deduction for expenditure on digital uptake and training.
The support to digital uptake is limited to a $100,000 spend so the tax benefit is limited to approximately $5,000 if the business spends the total of $100,000. Also the training concessions will only apply to external training. A small win for Small to Medium Enterprises (SMEs), however a bit unfortunate for businesses with just over $50m turnover.
The 2022-23 Federal Budget has focussed on innovation, creating more jobs and reacting to the rising cost of living.
For Pay As You Go (PAYG) instalments, lowering the Gross Domestic Product (GDP) uplift rate will mean lower instalments but this can already be achieved by PAYG variations and is only a timing difference.
There are amendments to the regulatory requirements for unlisted companies seeking to offer their employees an opportunity to acquire and interest in the entity. This reduction in red tape will hopefully assist smaller companies, but it will be interesting to see how many unlisted companies adopt an Employee Share Scheme as a result of these changes. Also, the Federal Budget seems unclear on when these new incentives will take effect.
Although no changes were made to personal tax rates to relieve the cost of living pressure, the “low and middle income tax offset” will be increased by $420 to a maximum of $1,500.
Other commendable initiatives include a one off $250 cost of living payment for eligible pensioners and welfare recipients. This will be paid in April and should just about cover the increase in your shopping bill for the month of April. Hopefully the extension of the First Home Guarantee Scheme to 50,000 places each year will have more impact for Australians trying to purchase their first home in a very buoyant property market.
If you do require any assistance with understanding how these changes will affect you or your business, please call your RSM provider.
There are a lot of incentives to increase training and employment, but there are no radical changes to the tax system and sometimes that is a good thing.
Anyway, I’ll wait until next week to fill up my tank (the cut in excise tax will take about a week to flow through to the pumps). Excuse the pun.
How will the Federal Budget 2022 impact you?
If you have any questions or require further information regarding the Federal Budget 2022-23 announcement, click the below button to contact an RSM adviser.
Most importantly in a bid to relieve the cost of living pressures for millions of Australians, a temporary reduction of fuel excise by 22 cents a litre will be introduced.
We can finally fill up the tank for the next six months without taking out a personal loan.
This is a short-term reactive measure, but welcome in any case.
