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Federal Budget 2022: 9 key take-outs for small businesses

From tax breaks to wage subsidies, fuel excise cuts to disaster funding, here are nine of the top take-outs for small businesses from the 2022-2023 Federal Budget.

At a glance

Small business highlights from Federal Treasurer Josh Frydenberg’s announcements and the Federal Budget:

  • Small businesses may be able to take advantage of a 120% tax deduction for eligible technology expenses up to $100,000, plus deductions for upskilling employees.
  • Wage subsidies for employers taking on new apprentices are on the cards as part of a refreshed apprenticeship incentive scheme.
  • Paid parental leave will now be a total of 20 weeks of leave that can be split between two parents.
  • Disaster funding is on the way for individuals and businesses impacted by recent flooding.
  • Proposed PAYG tax model changes aimed at improving cash flow would reduce the 10 per cent ‘uplift’ rate on tax liability payments to two per cent.

1. Tax breaks for digital technology expenditure

As it did in last year’s Budget, the Government has prioritised digital technology for small business.

Small businesses that take up digital technology are set to benefit at tax time, with new measures laid out in the Budget to boost investment in digital.

“Every hundred dollars small businesses spend on digital technologies like cloud computing, einvoicing, cyber security and web design will see them get a $120 tax deduction,” said Treasurer Josh Frydenberg.

Small businesses with an annual turnover of less than $50 million could claim the tax deduction for expenditure up to $100,000 in the tax year, incurred from Budget night until 30 June 2023.

This is part of a billion-dollar Technology Investment Boost scheme the Government hopes will encourage small businesses to go digital.

2. Tax deductions for employee training

Businesses can claim the same deduction of $120 for every $100 they spend on upskilling employees.

Budget documents outline a Skills and Training Boost initiative, with deductions for external training courses across the next two years, which the Coalition says will provide $550 million in tax relief to small businesses. The Skills and Training Boost will apply to expenditure incurred from Budget night until 30 June 2024.

Frydenberg said the Budget’s $3.7 billion investment in national skills reform would support an additional 800,000 training places to assist businesses in sourcing skilled workers.

3. Apprentice wage subsidies

The existing Boosting Apprenticeships Commencements scheme is being overhauled, to be replaced by the Australian Apprentices Incentive System.

As part of a $2.8 billion investment to increase the take-up and completion of apprenticeships, the Government says employers will be able to claim up to $4,500 in wage subsidies in the first year of the scheme when they take on apprentices in ‘priority fields’.

There is also potential for employers to claim further subsidies in the second and third years of the scheme, which kicks off once the current scheme ends at the end of the financial year. The new Australian Apprenticeships Incentive System (AAIS), will commence on 1 July 2022

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4. Paid parental leave changes

Employees and small business owners who are about to become parents will enjoy greater flexibility in the paid parental leave scheme.

Previously, the allowance was for 18 weeks for ‘primary carers’ and an additional two weeks for ‘secondary carers’, but new parents will now be able to split 20 weeks of paid leave between them as they see fit.

Single parents will be eligible to claim the full 20 weeks for the first time.

5. PAYG tax model changes aimed at improving cash flow

The 10 per cent ‘uplift’ rate on tax liability payments made by small businesses will be reduced to two per cent for the 2022-23 income year as part of the Government’s proposal.

The change to the pay-as-you-go (PAYG) tax model would see businesses keep more cash on hand throughout the financial year, rather than waiting to see if they are eligible for a refund at the end of the financial year if their actual liability was less than what they paid in tax.

The Government proposes that such amendments would improve small business cash flow to the value of $1.85 billion, pending legislative approval.

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6. Disaster funding

Businesses impacted by recent flooding in parts of Queensland and New South Wales are expected to receive financial assistance specific to them.

In addition to $150 million put towards disaster response and community recovery as part of the Emergency Response Fund across the coming year, small businesses are set to benefit from an extra $800,000 to the Regional Small Business Support Program.

7. Reduced red tape for government tenders

It might not have been mentioned in the Treasurer’s speech on Budget night, but the Coalition has also announced plans to help small and medium businesses acquire government contracts.

Currently, companies are required to have insurance if they are to be successful in their bid for a government contract, but these changes would remove that requirement if they went ahead.

This is alongside announcements of $8 million towards the Australian Small Business and Family Enterprise Ombudsman to boost financial literacy and capacity building for businesses, plus the creation of a small business unit within the Fair Work Commission worth $5.6 million.

8. Betting on a cold COVID winter

$6 billion towards mitigating a combined COVID-19 and influenza spike. Those small businesses looking for a light at the end of the COVID tunnel will not be pleased to consider the likelihood of further restrictions and business impacts, not to mention the personal toll to themselves and employees of another pandemic year. The difference this time around, perhaps, is a budget that allows for mitigation.

9. Fuel excise cuts

The government has listened to calls to cut fuel excise to reduce the current hip-pocket-pain of the petrol bowser. The impact of this measure is set to be 22c/litre saving – not an enormous boon for households and commuters. The bigger beneficiaries in this may be transport, logistics and other businesses that run fleets of vehicles. The measure will run for six months, ending at 11.59pm on September 28.

For the most up-to-date information, visit the Federal Budget website.

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The information in this post is provided for general information only and does not take into account your personal situation. Nothing contained in this post constitutes advice or an endorsement or recommendation of any kind by Prospa. Any links to third party websites are strictly for informational purposes only. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information as at the date of publication, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information for any reason, including due to the passage of time, or any loss or damage suffered by any person directly or indirectly through relying on this information.

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