With a Federal Election due in the next 8 weeks, the Morrison Government made its bid for re-election with the following headline announcements in the Federal Budget released on Tuesday 29 March 2022:
- Petrol tax slashed by 22 cents per litre for 6 months from Budget night.
- 10 million low and middle-income earners will receive a once-off bonus tax rebate of $420 which will be added to the current $1,080 tax offset resulting in a total offset of $1,500. Eligible individuals will receive this tax benefit after their 2022 Income Tax Return is lodged.
- A $250 one off payment to six million pensioners and welfare recipients.
There were no announced changes to tax rates or superannuation laws which is welcomed.
Small businesses (annual turnover of less than $50 million) will be eligible for the new Technology Investment Boost, which offers a bonus 20% tax deduction for technology costs such as online sales platforms, cloud computing, portable payment devices and cyber security systems.
The big winners appear to be:
- Tradies – New wage subsidies to employ apprentices.
- Low to middle income taxpayers – An increase to a tax offset available after they lodge their 2022 Tax Returns.
- Small Business – New 120% tax deductions for employee training and business digitisation.
Below are a number of key areas to be aware of:
Small Business Owners (turnover under $50 million)
| Key Point | Benefit to You |
| Technology Investment Boost To encourage small business to go digital, a bonus 20% tax deduction will be allowed for expenses and assets that support digital uptake including portable payment devices, cyber security systems, web page design and cloud software subscriptions. An annual expenditure cap of $100,000 applies to this boost. This is available from 29 March 2022 to 30 June 2023. |
Less Tax to Pay Next Year in 2023 NOTE: These expenses will need to be carefully tracked so you can claim the maximum deduction. |
| Skills and Training Boost To encourage small business to upskill their employees, a bonus 20% tax deduction will be allowed for external training courses provided to employees. Training must be delivered by an Australian registered entity and may be online. In-house training is excluded. This is available from 29 March 2022 to 30 June 2024. |
Less Tax to Pay Next Year in 2023 NOTE: These expenses will need to be carefully tracked so you can claim the maximum deduction. |
| Lower PAYG Tax Instalments From 1 July 2022, the Government will use an uplift factor of 2% on last year’s tax payments (reduced from 10%) for quarterly PAYG Tax payments. |
Better Cashflow with Less Tax to Pay This reduces the pre-payment of tax for your current income year. |
Business Owners
Key Point |
Benefit to You |
| Employee Share Scheme Access Expanded For employers which make larger offers in connection with employee share schemes in unlisted companies, participants can invest in:
|
Better Incentives for Your Staff Better opportunity for your staff to benefit from your business success and incentives to improve their performance. |
| Apprentice Wage Subsidy Support Extended Any employer who takes on an apprentice or trainee up until 30 June 2022 can receive:
|
Benefits to You for Employing Apprentices Cash subsidy to you for hiring apprentices and trainees. |
| Temporary Full Expensing finishing on 30 June 2023 If your business turnover is less than $5 billion, you can deduct the full cost of eligible depreciating assets of any value. |
This could significantly reduce tax payable and could result in significant tax refunds for you. An immediate full deduction for the cost of these assets will reduce your 2022 or 2023 tax. If you purchase sufficient assets to create a tax loss this year, combining this with the Loss Carry Back could result in significant refunds of tax paid in prior years. |
Individuals
Key Point |
Benefit to You |
| $420 increase in Low and Middle Income Tax Offset (LMITO) The combined $420 and existing LMITO of $1,080 gives eligible individuals a tax reduction of up to $1,500 for a single taxpayer or $3,000 for a couple. |
Tax Refund for You A larger tax refund to ease the current cost of living pressures. NOTE: You only receive this after 2022 Tax Return is lodged. This is a tax offset, meaning it only refunds any tax already paid. This is only beneficial if you’ve paid tax during the year. |
| $250 cost of living payment A one-off payment of $250 will be automatically paid to individuals who are currently receiving Australian Government social security payments. |
Cash for you Cash to ease the current cost of living pressures . |
| 50% minimum Super drawdown extended The 50% reduction of the superannuation minimum drawdown requirements for account-based pensions will be extended for another 12 months, |
Larger Super Balance Allows individuals to retain funds in their superannuation account if they’d prefer this.. |
| COVID-19 Test Costs Tax Deductible 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. |
Tax Refund for You New tax deduction to claim in your 2022 Tax Return. You will need to keep receipts as evidence to verify the deduction. |
| Home Guarantee Scheme Extended The number of guarantees under this scheme will be increased to 50,000 per year to assist home buyers purchase a home using a smaller deposit. |
Easier to Buy First Home Improved opportunity for first home ownership, enabling individuals to buy a home with a smaller deposit and without lender’s mortgage insurance. |
If there is a change in Federal Government over the next 8 weeks, we would expect the new Government to release their own updated Budget. This may change some or all of the key announcements made in this Budget..