The 2022 Budget marked a big change from the past 2 years which saw large expenditure and business support to help the economy and country through COVID-19. The Budget’s focus this year is on cost of living pressures, with minimal new measures announced relating to businesses. We have summarised the key measures impacting businesses and families below.
Cost of Living Support
The headline Budget announcements relate to relieving cost of living pressures on households with three key measures announced:
- Fuel excise is set to be cut in half for 6 months from 30 March 2022. This will equate to 22.1 cents per litre in excise reduction for petrol and diesel. No changes will be made to the fuel tax credits scheme.
- There will be a one-off $420 increase to the Low and Middle Income Tax Offset (LMITO) for 2021-22 income tax year. This increase will give eligible taxpayers a tax reduction of up to $1,500 for a single income household or $3,000 for a dual income household.
- A new one-off, income tax-exempt payment of $250 to help with increases in the current cost of living will be paid automatically to all eligible pensioners, welfare recipients, veterans, and eligible concession card holders in April 2022.
In relation to the increase of the LMITO, taxpayers with an income of $37,000 or less will be entitled to the full amount. The rebate will reduce as income rises and reduce to nil once income levels reach $126,000. This rebate (including the extra $420) will be claimed in the 2022 tax return.
As previously announced the Government has extended the 50% reduction in the minimum drawdown for pensions to 30 June 2023. This reduces the minimum pension payments needed to be made from super.
A further announcement was made to increase the amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.
The Government will provide $1.3 billion over 5 years from 2021-22 to support employers to engage and retain new apprentices, and reform the Australian Apprenticeships system. The full details of the reform are yet to be confirmed, however we understand the new scheme will incorporate cash payments of up to $5,000 for apprentices who finish their apprenticeships and $15,000 for employers of apprentices.
Tax incentives for training and technology investment
The Government has announced tax boosts for small businesses investing in training and technology.
Small businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees. Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees.
The Government has also announced that small businesses will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services. An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost.
What this means in practical terms is that for every $100 of qualifying expenditure in each category a tax deduction of $120 will be available.
For both of these measures, the boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The tax deduction for eligible expenditure incurred between 1 July 2022 and 30 June 2024, will be included in the income year in which the expenditure is incurred.
If you would like to discuss any of the Budget measures, please contact the Halpin Partners Team on (07) 4052 0800.