2022 Federal Budget – What It Means for You

Key Point

Benefit to You

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 lasts from 29 March 2022 until 30 June 2023.

Expenses incurred before 30 June 2022 can only be claimed in the 2023 Tax Return.

NOTE: These expenses will need to be carefully tracked so you can claim the maximum deduction.

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 lasts from 29 March 2022 until 30 June 2024.

Expenses incurred before 30 June 2022 can only be claimed in the 2023 Tax Return.

NOTE: These expenses will need to be carefully tracked so you can claim the maximum deduction.

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.

This reduces the pre-payment of tax for your current income year.

For employers that make larger offers in connection with employee share schemes in unlisted companies, participants can invest in:

• $30,000 per participant per year, accruable for unexercised options for up to 5 years, plus 70% of dividends and cash bonuses, or
• Any amount, if it would allow the to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.

Better opportunity for your staff to benefit from your business success and incentives to improve their performance.

Any employer who takes on an apprentice or trainee up until 30 June 2022 can receive:

• 50% of the apprentice’s wages in the first year, capped at a maximum amount of $7,000 per apprentice per quarter,
• 10% of the apprentice’s wages in the second year, capped at a maximum amount of $1,500 per apprentice per quarter, and
• 5% of the apprentice’s wages in the third year, capped at a maximum amount of $750 per apprentice per quarter.

Cash subsidy to you for hiring apprentices and trainees.

If your business turnover is less than $5 billion, you can deduct the full cost of eligible depreciating assets of any value.

An immediate full deduction for the cost of these assets will reduce your 2022 or 2023 tax. If you purchase enough assets to create a tax loss this year, combining this with the Loss Carry Back could give you significant tax refunds of tax paid in prior years.

The combined $420 and existing LMITO of $1,080 gives eligible individuals a tax reduction of up to $1,500 for a single or $3,000 for a couple.

A larger tax refund to ease the current cost of living pressures.

NOTE: You only receive this after you lodge your 2022 Tax Return. It is a tax offset, meaning it only refunds any tax you have already paid. If you haven’t paid any tax, then you don’t get this.

A one-off payment of $250 will be automatically paid to individuals who are currently receiving Australian Government social security payments.

Cash to ease the current cost of living pressures.

The 50% reduction of the superannuation minimum drawdown requirements for account-based pensions will be extended for another 12 months,

Allows individuals to keep more in their super account if they currently don’t need the cash.

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.

New tax deduction to claim in your 2022 Tax Return.

You will need to keep receipts as evidence to back up your claim.

The number of guarantees under this scheme will be increased to 50,000 per year to assist home buyers who have a lower deposit.

Improved opportunity for first home ownership, enabling individuals to buy a home with a smaller deposit and without lender’s mortgage insurance.