Another Budget and no substantial change to the tax and super system, even when they have had some genius ideas from a amazing tax guru… So what did we get in this pre election budget?
The only change announced for individuals is that the Government will increase the low and middle income tax offset for the 2022 income year.
Rather than the maximum rate of the low and middle income tax offset being $1,080, it will be increased to $1,500. This will mean more individuals will want to lodge their returns in early July this year as they will be getting a larger refund.
Small business skills and training boost
The Government is introducing two new small business concessions.
The first is called the “skills and training boost”. Under this concession, 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. These external training courses will need to be provided to employees in Australia or online, and delivered by entities registered in Australia.
For a small business company (BRE 25%) this means your external training costs after tax reduce by 5%.
This concession will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 and run until 30 June 2024.
Small business technology investment boost
The second new small business concession is called the “technology investment boost”.
Like the first concession, small businesses with aggregated annual turnover of less than $50 million)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.
There is an annual cap of $100,000.
Again, this concession will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023. Why is this 2023 when the skills boost is 2024?
Patent Box changes
The Government has announced it will expand the patent box regime that it announced in the last Budget and is currently in a Bill before Parliament. It will do this by extending this regime to apply to:
- corporate taxpayers who commercialise their eligible patents linked to agricultural and veterinary chemical products listed on the Australian Pesticides and Veterinary Medicines Authority, the Public Chemicals Registration Information System register, or eligible Plant Breeder’s Rights.
- corporate taxpayers who commercialise their patented technologies which have the potential to lower emissions.
The Government will also allow medical and biotechnology patents granted or issued after 11 May 2021 to be eligible for the regime. This is just brings forward the date in the current legislation before the Parliament.
Remember that under the patent box regime, eligible corporate income will be subject to an effective income tax rate of 17%.
The Government has confirmed two earlier COVID announcements in this Budget.
First is that they will ensure payments from certain state and territory COVID-19 business support programs are non-assessable non-exempt income until 30 June 2022.
The second is that the costs of taking a COVID-19 test to attend a place of work are tax deductible for individuals from 1 July 2021. This will also ensure fringe benefits tax will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose.
Employee Share Schemes
The Government has announced it will also make a change to the rules for employee share schemes.
The proposed changes is that, where employers make larger offers in connection with employee share schemes in unlisted companies, participants can invest up to:
- $30,000 per participant per year, accruable for unexercised options for up to 5 years, plus 70 per cent of dividends and cash bonuses; or
- any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.
The Government has only made one announcement in the Budget in relation to superannuation.
They have announced they will extend the 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023.
The Government has also announced a series of changes
- The Government will set the GDP uplift factor for pay as you go and GST instalments at 2% rather than 10% for the 2022/23 income year.
- The Government will allow businesses the option to report Taxable Payments Reporting System data through their accounting software on the same lodgment cycle as their activity statements.
- The Government will allow the proceeds from the sale of Australian Carbon Credit Units and biodiversity certificates generated from on-farm activities to be treated as primary production income for the purposes of the Farm Management Deposits scheme and tax averaging from 1 July 2022.
- The Government will enable companies to choose to have their pay as you go instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments. This is expected to commence on 1 January 2024.
- The Government will provide around $650 million to the ATO to extend the operation of the Tax Avoidance Taskforce by 2 years.
- The Government will allow all trust tax return filers the option to lodge income tax returns electronically from 1 July 2024
- Government will halve the excise and excise-equivalent customs duty rate that applies to petrol and diesel for 6 months
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