Cost of living relief but is there anything for small business?
In a surprise to no one, this Federal Budget has a huge focus on the cost of living, and provides relief for individuals and families for this to the tune of $8.6 billion.
Specifically, the announced cost of living relief includes:
- Fuel excise being cut by 22c per litre for the next six months (starting now),
- An additional payment of $420 to be paid as part of the Low and Middle Low Income Tax Offset (LMITO) and
- A one-off $250 payment for those on the pension and some government welfare payments.
It was very much a pre-election budget with the impact of the above announcements to occur either immediately (fuel excise) or before the budget ($250 payment). The flow of funds from the LMITO changes won’t be available until 2022 tax returns are lodged. It is expected the law will be passed soon.
The Federal Government has had to walk a very delicate balance between providing cost of living relief and trying not to add to the increasingly problematic inflationary pressure building within Australia. No doubt the Reserve Bank of Australia will be watching closely and considering how future interest rate movements play into the current economic situation.
But was there anything in the budget for small business?
Attracting and retaining skilled staff
We see in our client base that attracting and retaining staff is a significant issue for many businesses. To this end, a “Small business – Skills and training boost” has been announced. Broadly this initiative will allow a 20% additional deduction for eligible training expenditure used to upskill staff. We need to see further detail on these measures including who can provide the training, and what “eligible expenditure” actually is.
Adoption of digital technologies
There was also a “Small business – Technology investment boost” announced to encourage and support the adoption of digital technologies for small business. An additional 20% deduction will be provided for eligible expenditure by business, including on depreciable assets, to adopt digital technologies. There will be an annual expenditure cap of $100,000.
Pending the details around these initiatives we expect that there will be benefits to employers and small businesses. However, training and upskilling can be expensive and the offsetting cashflow benefit from these initiatives won’t be received until the 2023 income tax return has been lodged.
There are some changes announced as to how PAYG and GST instalments will be calculated, proposed changes to the regulations around employee share scheme reporting which may make offering shares to employees of private companies more attractive, and changes to support employment and retention of new apprentices.
The ATO has received further funding to focus on large private groups and high net wealth individuals so we can expect a continued focus on various review and engagement programs by the ATO. There are also various reporting changes including single touch payroll data sharing with state revenue authorities, taxable payment reporting, and trust reporting that will transition over the coming 12 -18 months.
What does this mean for the election?
This budget didn’t propose any significant tax policy changes that provides an indication of the position that the Coalition will take to the coming Federal election. Will the Australian Labor Party put forward some systemic tax changes as part of their campaign? It seems unlikely after the issues they had at the last election with regards to franking credits and negative gearing.