Federal Budget 2022 – What you need to know

We have been picking through the Federal Budget for a couple of weeks now. We have pulled some salient points that we are important to the business owners that we work with. If you want clarification, I am only ever a phone call away!

Tax breaks for digital technology expenditure

As it did in last year’s Budget, the Government has prioritised digital technology for small businesses. Small businesses that take up digital technology are set to benefit at tax time.

This includes things like online sales platforms, digital inventory tracking systems and cyber security. Also extended to cloud computing subscriptions and portable payment devices. It covers all digital tools and any depreciating assets that support digital adoption.

So, if you spend $30,000 on these platforms (and you are a company that is profitable and pays tax) until now you would have got $7,500 tax back. Under this new structure, you will get $9,000 back. If you pay for these between now and 30 June 2022 you will claim this extra amount in the FY 2023 year. Anything spent post 1 July 2022 will be claimed in the year you spend the cash. This tax boost will be available until 30 June 2023.

This measure targets small businesses with an annual turnover of less than $50 million. The Government hopes this incentive will encourage small businesses to go digital. It believes it will then allow them to be more competitive.

Tax deductions for Employee Training giving a Skills and Training Boost

A new skills and training boost to help small businesses upskill employees is being introduced.

If your turnover is less than $50 million you will be able to deduct an extra 20% of your expenditure. That means if you spend $1,000 on a training course and you operate as a Company you get $250 back on tax. Under this new structure, you get to claim $1,200 as a deduction i.e. $300 back on tax. You need to be profitable and paying tax for this to occur.

There are a number of finer details with this. The course must be an external course you pay for. It should be delivered by businesses registered in AU. If you pay for these between now and 30 June 2022 you will claim this additional amount in the Financial Year 2023. Anything spent after 1 July 2022 will be claimed in the year you spend the cash. This boost will be available until 30 June 2024.

So, if your team needs some upskilling NOW is the time to get that done!

Apprentice + Trainee Scheme

The boosting apprenticeship wages subsidy has again been extended to include apprentices and trainees who are hired between now and 30 June 2022. Employers are eligible for a rebate of 50% of the apprentice wages up to a maximum of $7k per quarter for the first 12 months of the apprenticeship.

The current scheme also includes:

  • 10% of wages for the 2nd year of the apprenticeship.
  • This is capped at $1,500 per quarter and 5% for the 3rd year capped at $750 per quarter.
  • Your existing apprentices have already been qualified so you will continue to claim for their wages rebate each Quarter.
  • Apprentices will also receive $1,250 in Training Support Payments every 6 months for 2 years. This starts post 1 July 2022 and will be for apprentices in “priority” occupations.

From 1 July 2022, the existing boosting apprentices’ wage subsidy will be replaced with a new wage subsidy. It will only be available to employers of apprentices in “priority” occupations. It will cover 10% of the wages for first and second-year apprentices, and 5% for third-year apprentices.

If you are an employer of apprentices in non-priority occupations will receive a one-off payment of $3,500 upon hiring the apprentice.

The priority occupations are currently listed as

  • age care
  • child care
  • disability care
  • nursing.

Cutting Red Tape

It is true that none of the measures announced to help small businesses reduce red tape are ready to go now. There are strides to make things like Payroll Tax easier to manage. Data from Single Touch Payroll will be shared with revenue offices. Taxable Payment Summaries will be easier to lodge and will occur with your BAS rather than at the end of the year. You know Xero already makes the Taxable Payment Summaries easy to complete provided you are using contacts correctly. We will be all over this for you when these changes do happen.

It is also worth noting that the ATO also has been allocated a big chunk of money for data matching. That makes it more difficult for those trying to avoid tax.

Don’t forget also…

The scrapping of the $450 threshold amount

At the moment if your employee earns less than $450 in a month as an employee you are not required to contribute to super for them. That threshold is being scrapped. This means that every employee over 18 will be paid Super on every dollar they earn from the 1st July 2022.

There are also scheduled Super Guarantee Rate Changes

From 1st July the amount of Super you need to contribute for employees (including yourselves) will increase. The amount is currently 10% of salary and wages paid and will rise to 10.5% of salary and wages.

If your employment contracts state wages + super, you will be adding an extra 0.5% to your employees costs for the year. The super amount is set to go up 0.5% every year until it reaches 12% in 2026.

  • 1 July 2021 – 30 June 2022 – 10%
  • 1 July 2022 – 30 June 2023 – 10.5%
  • 1 July 2023 – 30 June 2024 – 11%
  • 1 July 2024 – 30 June 2025 – 11.5%
  • 1 July 2025 – 30 June 2026 and onwards – 12%

All in all, this was an interesting Federal Budget with some exciting incentives. With most of them, your Accountant will be the person that makes sure that you get the right deductions. Your bookkeeper is always on hand to help too!

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