Federal Budget 2022-2023

Posted on 30 March 2022 | by Allan Hall

Tax and Superannuation Overview

The Federal Treasurer, Mr Josh Frydenberg, handed down the 2022–23 Federal Budget at 7:30pm (AEDT) on 29 March 2022.

In an economy emerging from the pandemic, the Treasurer has confirmed an unemployment rate of 4% and an expected budget deficit of $78 billion for 2022–23.

As international uncertainties add pressure to the cost of living, key measures provide cost of living relief in the form of an increased Low and Middle Income Tax Offset, a one-off $250 payment for welfare recipients and pensioners and a 6-month fuel excise relief.

Other measures seek to promote innovation, with expanded “patent box” tax concessions proposed, and provide tax incentives for small business to invest in the skills of their employees. A lower GDP uplift rate for PAYG and GST instalments has also been proposed to support cash flows of small and medium businesses.

To read our comprehensive Budget report outlining the changes to taxation and accounting, please click below:

2022-2023 BUDGET REPORT

The highlights are set out below:

Business

Additional state and territory COVID-19 business support grant programs will be eligible for tax treatment as non-assessable non-exempt income until 30 June 2022.
Small and medium businesses will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees.
Small and medium businesses will be able to deduct an additional 20% of eligible expenditure supporting digital adoption.
The Boosting Apprenticeship Commencements wage subsidy will be extended by 3 months.
Concessional tax treatment will apply from 1 July 2022 for primary producers selling Australian Carbon Credit Units and biodiversity certificates.
Access to employee share schemes in unlisted companies will be expanded.
The PAYG instalment system is set for a structural overhaul with a set GDP uplift of 2% to apply for the 2022–23 income year.
Additional funding will be provided to further reform insolvency arrangements, including the insolvent trading “safe harbour”.
Business registry fees will be streamlined over 3 years from 2023–24.
Wholly owned Australian incorporated subsidiaries of the Future Fund Board of Guardians will be exempt from corporate income tax.

Increased deduction for small business external training expenditure

Small and medium businesses will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees.

The additional deduction will apply for businesses with aggregated turnover of less than $50 million. The external training course must be delivered by an Australian entity and provided to employees in Australia or online. In-house or on-the-job training and expenditure for persons other than employees will be excluded.

The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2024. Where eligible expenditure is incurred before 1 July 2022, the additional deduction will be claimed in the tax return for the following income year.

Increased deductions for digital adoption by small businesses

Small and medium businesses will be able to deduct an additional 20% of eligible expenditure supporting digital adoption.

The additional deduction will apply for businesses with aggregated turnover of less than $50 million. Eligible expenditure will include the cost of depreciating assets and business expenses supporting digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services. An annual cap of $100,000 will apply to expenditure eligible for the additional deduction.

The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023. Where eligible expenditure is incurred before 1 July 2022, the additional deduction will be claimed in the tax return for the following income year.

Apprenticeship wage subsidy extended

The Boosting Apprenticeship Commencements wage subsidy will be extended to support businesses and Group Training Organisations that take on new apprentices and trainees. The subsidy will now be available to 30 June 2022. This measure will provide for an additional 35,000 apprentices and trainees. Eligible businesses will be reimbursed up to 50% of an apprentice or trainee’s wages of up to $7,000 per quarter for 12 months.

Individuals

The low and middle income tax offset will be increased by $420 in the 2021–22 income year to ease the current cost of living pressures.
A one-off payment of $250 will be made to individuals who are currently in receipt of Australian government social security payments, including pensions, to ease cost of living pressures.
Additional funding will be provided over 5 years to support older Australians in the aged care sector with managing the impacts of the pandemic.
Costs of taking a COVID-19 test to attend a place of work will be tax deductible for individuals and exempt from fringe benefits tax from 1 July 2021.
A single Paid Parental Leave scheme of up to 20 weeks paid leave will replace the existing system of 2 separate payments.
CPI indexed Medicare levy low-income threshold amounts for singles, families, and seniors and pensioners for the 2021–22 year announced.
The number of guarantees under the Home Guarantee Scheme will be increased to 50,000 per year to assist homebuyers with lower deposits.

Superannuation

The 50% reduction of the superannuation minimum drawdown requirements for account-based pensions will be extended for an additional year.

Need help?

If you would like assistance to interpret these changes and how they may affect your individual circumstances or your business, please contact your Allan Hall Advisor on 02 9981 2300.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.

CONTACT ALLAN HALL

2021-2022 Federal Budget

Posted on 12 May 2021 | by Allan Hall

Taxation and Accounting Overview

The Budget lists increased support for unemployed Australians as the single largest item of new spending, with $697.4 million in new spending in 2020-1 and $9.46 billion over five years, including the four years of the Forward Estimates.

However the Budget splits Aged Care spending into two separate items – residential care and home care. Together these account for $18.25 billion in new spending over five years. The Budget also includes $13.2 billion over four years for the NDIS.

The Budget deficit will reach $161 billion in 2020-21, before falling to $57 billion in 2024-25. Net debt will increase to $617.5 billion or 30.0 per cent of GDP this year and peak at $980.6 billion or 40.9 per cent of GDP in June 2025.

The Budget includes a further $1.9 billion for the roll out of vaccines. It provides another $1.5 billion for COVID-related health services, including for testing and tracing, respiratory clinics and telehealth.

To read our comprehensive Budget report outlining the changes to taxation and accounting, please click here. For all other Budget documents, including an overview from the Australian Government, please visit the Budget website: https://budget.gov.au/.

We have provided an overview for tax, superannuation and other key areas as follows.

Personal tax

The Budget provides $7.8 billion in tax cuts by retaining the low and middle income tax offset (LMITO) in 2021-22. LMITO, which was introduced as a coronavirus measure was due to expire in June 2021.

An additional $25.1 billion in tax cuts announced in previous Budgets are expected to flow to households in 2021-22.

Around 10.2 million individuals will benefit from retaining the offset in 2021-22, which is worth up to $1,080 for individuals or $2,160 for dual income couples.

Business tax concessions

The Budget extends by one year two business tax concessions announced in the 2020-21 Budget — temporary full expensing and temporary loss carry-back. Together, temporary full expensing and temporary loss carry-back provide an incentive for businesses to bring forward investment to access the tax benefits before they expire.

Combined, the extension of the temporary full expensing and temporary loss carry-back measures is estimated to deliver a further $20.7 billion in tax relief to businesses over the forward estimates.

Small business tax disputes

The Budget confirmed a pre-Budget announcement allowing small businesses to litigate tax disputes with the Australian Tax Office before Administrative Appeals Tribunal, rather than the slower and more expensive litigation before the Federal Court, as at present.

Skills and training

The Budget provides $2.7 billion for more than 170,000 new apprenticeships and traineeships including 2,700 places in Indigenous girls academies to help them finish school and enter the workforce, and more STEM scholarships for women, in partnership with industry.

Manufacturing innovation

The Government has established a new “patent box” starting on 1 July 2022. Under the patent box, income earned from new patents that have been developed in Australia will be taxed at a concessional 17 per cent rate. The patent box will apply to the medical and biotech sectors and the Government said will consult on expanding it to the clean energy sector.

Superannuation

The Budget Increases the amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.
It also removes the $450 per month minimum income threshold for the superannuation guarantee. The Treasurer said, “This will improve economic security in retirement for around 200,000 women.”
The Government has removed the work test on voluntary superannuation contributions to superannuation by people aged 67 to 74.
It will also allow those aged over 60 to contribute up to $300,000 into their superannuation if they downsize their home, freeing up more housing stock for younger families.
The Pension Loan Scheme has been expanded, providing immediate access to lump sums of around $12,000 for singles, and $18,000 for couples.

Higher education

The Budget provides an extra 5,000 places in higher education short courses.

Childcare

The Budget confirms the pre-Budget announcement of $1.7 billion investment in childcare.

Digital infrastructure

The Budget contains $1.2 billion for a Digital Economy Strategy. It will

Establish a new national network of Artificial Intelligence Centres to drive business adoption of these new technologies.
Expand the Cyber Security Innovation Fund to train the next generation of cybersecurity experts.
A digital skills cadetship trial which combines workplace and vocational training.

Need help?

If you would like assistance to interpret these changes and how they may affect your individual circumstances or your business, please contact your Allan Hall Advisor on 02 9981 2300.

The NSW Budget 2020 – 2021

Posted on 23 November 2020 | by Allan Hall

Ground-breaking support to help NSW businesses grow and create jobs

From $1,500 digital vouchers for smaller enterprises to cover government fees and charges, to relief from payroll tax, and a 3-year extension of the Business Connect program, NSW businesses are set to benefit from tax relief and other support measures designed to improve cash flow and help hire more staff as the State Government moves forward with its COVID-19 stimulus and economic recovery plan outlined in the 2020-21 NSW Budget.

Small businesses make up 97.5% of businesses in NSW and are a prime focus of the NSW Government’s 2020-21 Budget. If businesses are supported in post-COVID-19 recovery, they are more likely to stay in business, keep people in jobs and create new jobs as part of the State’s economic recovery.

With numerous businesses impacted by drought, bushfire and COVID-19, this year it is important that support is available at this critical time.

Key Measures

Key NSW Budget business and employment support measures include:

2-year payroll tax rate cut from 5.45% to 4.85%. More information on the payroll tax changes will be made available on the Revenue NSW website.
Permanent increase in payroll tax threshold from $1 million to $1.2 million. These tax cuts, worth $2.8 billion, will provide an average saving of around $34,000 a year for the next two years for businesses liable for payroll tax.
$500 million Out & About program providing NSW residents with $100 of digital vouchers to redeem on dining out and entertainment activities to boost businesses and encourage spending locally. For information on the Out & About scheme, visit nsw.gov.au. Information on the digital vouchers will become available on the Service NSW website in coming weeks.
$472 million for new digital vouchers worth $1,500 which can be used by small businesses under the payroll tax threshold towards the cost of government fees and charges.
More than $39 million funding boost for the Business Connect program, extended for three more years to support small businesses in accessing business advice.
$5 million for the NSW Small Business Commission to establish a new tendering support service under a 4-year program, assisting small business to prepare and submit Government tenders.
$2 million to continue the Small business rebate program, providing up to $500 to support small business owners and sole traders who buy and install safety equipment; and
Temporary extension to 28 March 2021 of the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles for retail tenants only with an annual turnover of less than $5 million. Landlords who provide rent reductions between 1 January 2021 to 28 March 2021 to eligible retail tenants experiencing financial distress due to the COVID-19 pandemic can apply for land tax relief of up to 25% on the land leased for the 2021 land tax year.
As a longer-term tax reform objective, the NSW property tax system has been flagged for reform around its inefficiencies and barriers to homeownership. The next step will invite public feedback on a possible transition away from the current transfer duty (stamp duty) and land tax system and move instead to a property tax system to boost long-term economic growth.

Need help?

If you would like more detailed information, you can read the full NSW Budget 2020 – 2021 Overview and the NSW Treasurer’s Speech.

For further assistance to interpret these changes and how they may affect your individual circumstances or your business, please contact your Allan Hall Advisor on 02 9981 2300.