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

Posted on 12/4/2022

Tax Advisory

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Overview:

Even before the Federal Budget was announced, we knew significant, long-term tax changes were to be ruled out in favour of temporary measures. We’ve broken down these key measures in this 2022-23 Federal Budget Tax Wrap-Up.
2022 - 23 Federal Budget Wrap-Up

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.

Tax Planning Tip

If you intend on taking advantage of either of these two measures, please contact your Perks Adviser to discuss whether or not your PAYG instalments can be varied in order to get the benefit earlier.

Fuel Excise changes

The 2022-23 Federal Budget revealed a halving of the fuel excise, starting from 30th March 2022, for a 6-month period.

Whilst this is welcome news for fuel users, it relies on the fuel retailers passing on the savings at the bowser.

It is also important to understand that as a general rule, businesses are able to claim Fuel Tax Credits (FTC) for the excise that is included in the price of fuel if the fuel is used in:

  • light vehicles travelling on private roads; or
  • heavy vehicles; or
  • certain non-vehicle settings (machinery, plant and equipment).

This credit will reduce relative to the reduction in excise for the next 6 months.

Heavy vehicles travelling on public roads have their fuel tax credit reduced by the Road User Charge (RUC). This means that not all fuel excise is refunded for heavy vehicles travelling on public roads under the FTC regime.

The Government is not changing the existing RUC arrangements for heavy vehicles travelling on public roads, but the temporary reduction in fuel excise will provide a net benefit for heavy vehicle operators of 4.3 cents per litre from 30 March 2022, compared to current settings. This is because the RUC is currently 26.4 cents per litre of fuel used and, from 30 March 2022, the excise paid by heavy vehicles will be 22.1 cents per litre, which is less than the RUC. Therefore, the FTC for heavy vehicles on public roads will reduce to nil.

Operators of heavy vehicles travelling on public roads will therefore have to ensure that they update their processes for the next 6 months to ensure that they are not claiming any FTCs unless the use of that vehicle qualifies for a refund of the RUC.

Speak to one of our specialist Tax Consulting Directors.

Neil Oakes

Neil Oakes

Providing tax consulting advice to small, medium and large enterprises, with specific focus in the aged-care and property industries.

Brian Nimmo

Brian Nimmo

Brian specialises in providing high level taxation advice. Tax consulting across corporate tax, capital gains tax and international tax, to ATO product and class rulings for managed investment schemes.

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