Hey everyone, Gen here from Cornell Irving Partners with a review of last weeks budget which was handed down on the 25th of October 2022. In all honesty, there is not a lot in the budget for individuals/households and businesses, but we’ve broken it down for you into a few key areas of what was included.
Key Take Aways
Budget Overview on a National level
Natural disaster relief
Up to $200 million per year towards disaster prevention and resilience initiatives
One million new homes to be built to tackle the housing crisis
$42.2 million towards overcoming the skills shortage by raising awareness and speeding up the visa processing to bring skilled migrants to Australia
NBN (National Broadband Network) will receive an upgrade with a $2.4 billion investment to extend connection to 1.5 million homes and businesses.
Mental Health Support for Small Businesses
An investment of $15.1 million for mental health and financial counselling tailored for businesses.
$15 Billion will be invested to build and drive national resources including: agriculture, forestry and fisheries, transport, medical science, renewable energies and low emission technologies and defence
Environment and Energy
$20 billion investment towards developing renewable energies through the Rewiring Nation plan
What’s in the budget for everyday people and households?
The stage 3 tax cuts will abolish the 37% marginal tax rate and reduce the 32.5% rate to 30%. This means that the marginal tax rate for taxpayers earning between $45,001 to $200,000 will be taxed at 30%. The top marginal rate of 45% would apply to income above $200,000.
Boosting Parental Leave
Boosting paid parental leave from 1/7/2023. Enabling both parents to share the entitlements, a $350,000 family income test will be introduced as an alternative to the individual income test and there is also more flexibility regarding the payment, claim and leave periods. The expansion to 26 weeks will be phased in from 1 July 2024 to 1 July 2026.
Seniors Health Care Card
Commonwealth Seniors Health Care Card thresholds will increase from $61,284 to $90,000 for singles, and from $98,054 to $144,000 for couples.
Low and Middle Income Tax Offset not continued
The Albanese government will not extend the low and middle income tax offset (LIMTO), meaning workers earning less than $126,000 will not get a tax break, worth up to $1,500, beyond 2022.
The government has expanded the eligibility for the downsizer contribution. The minimum age for making a downsizer contribution will reduce from 60 to 55 years of age.
What’s in the budget for business?
Battery/Hydrogen/Hybrid Cars Exempt from FBT
From 1 July 2022, exempt battery, hydrogen fuel cell and plug-in hybrid electric cars will be exempt from fringe benefit tax and import tax if they have a first retail price below the luxury car tax threshold for fuel-efficient cars. The car must not have been held or used before 1 July 2022.
Energy Efficiency Grant Funding
Grant funding available to improve small business with their energy efficiency. These payments will cover feasibility studies, planning measures, along with equipment and facility upgrades to boost efficiency, lower emissions or smooth out power demand.
Tax Incentives for Small Businesses (not part of the Budget)
These are not part of the budget but more information on the following as exposure draft legislation has been released:
20% Bonus Deduction Digital Expenses
Officially titled: Treasury Laws Amendment (Measures for Consultation) Bill 2022 – Exposure Draft - Technology Investment boost
For small businesses, a 20% bonus deduction for the cost of expenses that support digital uptake, incorporating software and computer hardware.
Digital enabling items include:
- Computers, telecommunications hardware and equipment
- Software, systems and services that form and facilitate the use of computer networks
- E-Commerce — supporting digitally ordered or platform enabled online transactions
- Digital media and marketing — audio and visual content that can be created, accessed, stored or viewed on digital devices
- The expenditure must be incurred wholly or substantially for the purposes of an entity’s digital operations.
- The expenditure must be incurred between 7.30pm on 29/3/2022 and 30/6/2023. If spent on a depreciating asset, it must be installed ready for use by 30/6/2023. The deduction will be the lower of 20% of eligible expenditure or $20,000.
- The purchase must be deductible under tax law to be eligible and if the item purchased is sold or transferred during the relevant time period it is ineligible for the bonus deduction. For example, if eligible, a 100% business use laptop cost $2000, the 20% bonus deduction will be an extra $400.
20% bonus deduction for the cost of external training courses by registered providers for individuals
Officially titled: Treasury Laws Amendment (Measures for Consultation) Bill 2022 – Exposure Draft – Skills and training boost
For small businesses, a 20% bonus deduction for training of employees by a registered training provider for an entity with an aggregated turnover of less than $50 Million.
Some examples of registered training include:
- The expenditure must be already deductible under taxation law.
- The expenditure must be incurred between 29/3/2022 and 30/6/2024.
- Enrolment or arrangement with the training provider to occur on or after 7.30pm on 29/3/2022. Must be a business with employees. Non-employees such as sole traders, partners in a partnership and independent contractors are not employees and are not eligible.
- The training providers must be registered with certain government approved authorities, so just take care not all providers are eligible.