2022-23 Federal Budget Wrap-Up: Key Measures for SMEs

The 2022-23 Federal Budget announcement provided some temporary measures designed to assist and support the SME business sector. Neil Oakes, Director, Tax Consulting breaks down the key incentives below.

New small business skills and training boost

Summary:

• Eligible small businesses will be able to claim an extra 20% of the eligible expenditure incurred on external training courses provided to employees
• Claim = 120% of the cost of eligible training
• Available to small businesses with an aggregated turnover of less than $50m
• Will apply where expenditure incurred between 7:30pm (AEDT) on 29 March 2022 and 30 June 2024
• Claim in 2023 and/or 2024 income tax return

This useful measure will enable eligible businesses to reap the benefits in the 2024 financial year when the 2023 taxation returns are lodged.
As with all measures, there are always a few considerations that businesses need to be aware of when looking to take full advantage:

• The benefit may only be a temporary for businesses which are operated via Companies and Unit Trust structures. Because the accounting profit (which will differ to the taxable profit due to the increased deduction) is paid out to the equity holders, it will result in either an unfranked dividend (company structure) or reduce the unit holders CGT Cost base (Unit Trust structure). This will need to be kept in mind and factored into any future planning for the business; and
• It appears that payment needs to be made to a Registered Training Organisation (RTO). Therefore, to avoid any missing out on the measure, businesses will need to check that the payment is made to an RTO, as some organisations such as industry associations who offer training courses, may not be a recognised RTO.

New small business technology investment boost

Summary:

• Eligible small businesses will be able to claim an extra 20% of the eligible expenditure incurred on business expenses and depreciating assets that support the business’ digital adoption
• Eligible expenditure includes items such as portable payment devices, cyber security systems and subscriptions to cloud-based services
• Claim = 120% of the cost of eligible expenditure
• Annual expenditure cap of $100,000
• Available to small businesses with an aggregated turnover of less than $50m
• Will apply where expenditure incurred between 7:30pm (AEDT) on 29 March 2022 and 30 June 2023
• Claim in 2023 income tax return

This is another welcomed measure that will enable eligible businesses to reap the benefits in the 2024 financial year when their 2023 taxation returns are lodged. Once again, this measure comes with a few considerations that businesses need to be aware of when looking to take advantage of this measure:

• The benefit may only be a temporary for businesses which are operated via Companies and Unit Trust structures for the same reasons as outlined above under the Skills and Training Boost Measure; and
• It is important to remember that the measure applies equally to both once off expenditure, e.g. monthly subscriptions, as well as acquisitions of depreciable plant. As such, expenditure on eligible technological assets can be written off in full using the Full Expensing of Depreciating Asset measure at 120% of their cost.