Federal Budget 2022-2023 Highlights of tax measures for small businesses

04 Apr
Tax Measures
Tax Measures

Treasurer Mr. Josh Frydenberg handed down the 2022-2023 Federal Budget on Tuesday 29 March 2022. Among a range of announcements, we highlight three tax measures affecting most Small Businesses.

Changes affecting Small Businesses

1. Skills, training, and digital adoption deduction boosts for small businesses

There are two support measures for small businesses (aggregated turnover less than $50 million) announced.

Small businesses might enjoy a ’20 per cent boost’ of tax deductions of eligible expenditures incurred on external training courses and digital technology during 7:30pm (AEDT) on 29 March 2022 until 30 June 2024.

Skills and training boost. This measure is designed to support small businesses to train and upskill their employees. An additional 20 per cent of expenditure incurred can be deducted on external training courses provided to its employees in Australia or online, delivered by RTOs (Registered Training Organisations) registered in Australia. Exclusions will apply, such as expenditures for on-the-job training, or in-house training, external training courses provided by foreign entities, and external training courses for persons other than employees.

Technology investment boost. The Australian government will introduce a technology investment boost to support digital adoption by small businesses. Small business can deduct an additional 20 per cent of business expenses and depreciating assets that support its digital adoption, such as portable payment devices, cyber security systems, and cloud-based services subscriptions. An annual cap of $100,000 will apply in each year so the maximum additional deduction is $20,000 per eligible year.

Table below summarises the timing to claim the deduction boosts.

Eligible expenditures Tax deduction boost
7:30pm (AEDT) on 29 March 2022 to 30 June 2022 Claimed in 2023 tax return
01 July 2022 to 30 June 2023 Claimed in 2023 tax return
01 July 2023 to 30 June 2024 Claimed in 2024 tax return

2. PAYG Instalments changes

It is anticipated that from 01 January 2024, companies will be allowed to calculate their PAYG Instalments based on current financial performance, extracted from business accounting software, with some tax adjustments.

The Budget papers also confirm the Treasurer’s earlier announcement that the GDP uplift factor for PAYG Instalments will be set at 2 per cent for the 2022-23 income year, instead of the 10 per cent that would have applied under the statutory formula.

It is worth noting that the temporary reduction of GDP uplift factor provides cash flow relief to small businesses during the 2022-23 income year. However, small businesses may face higher tax bill when they lodge the tax return where the actual income tax is calculated. Contact Cloud8 today for an obligation free appointment to discuss cash flow management.

3. More COVID-19 business grants are non-assessable non-exempt income

The Government has extended the measure which enables payments from certain State and Territory COVID-19 business support programs to be made NANE (non-assessable non-exempt) for income tax purposes until 30 June 2022.

The following list of NANE grants is not exhaustive, but it shows how many ‘tax free’ COVID-19 payments have been made to small businesses.

NSW state grants

  • 2021 COVID-19 business grant
  • 2021 COVID-19 JobSaver payment
  • 2021 COVID-19 micro-business grant
  • NSW Performing Arts COVID Support Package
  • New South Wales Accommodation and Support Grant.
  • New South Wales Commercial Landlord Hardship Grant.
  • New South Wales Performing Arts Relaunch Package.
  • New South Wales Festival Relaunch Package.
  • New South Wales 2022 Small Business Support Program.

VIC state grants

  • Alpine Business Fund
  • Alpine Resorts Support Program (Streams 1, 2 and 3)
  • Business Continuity Fund
  • Business Costs Assistance Program Round Two
  • Business Costs Assistance Program Round Two – July Extension
  • Business Support Fund 3
  • Impacted Public Events Support Program
  • Independent Cinema Support Program
  • Licensed Hospitality Venue Fund
  • Licensed Hospitality Venue Fund 2021
  • Licensed Hospitality Venue Fund 2021 – July Extension
  • Live Performance Support Program
  • Melbourne City Recovery Fund – Small business reactivation grants
  • Outdoor Eating and Entertainment Package
  • Small Business COVID Hardship Fund
  • Sole Trader Support Fund
  • Sustainable Event Business Program

QLD State grants

  • Queensland 2021 COVID-19 Business Support Grant.

SA State grants

  • South Australia COVID-19 Tourism and Hospitality Support Grant.
  • South Australia COVID-19 Business Hardship Grant.

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