Budget 2022/2023 - Summary for Small Businesses and Individuals

The 2022/2023 Budget was delivered by the Federal Government on 29th March, and whilst the focus of the budget has been to alleviate the pressure brought on by an increase in cost of living, there are some potential wins for small businesses and individuals. Please Keep in mind that all the below measures are proposed and would be subject to being passed by parliament. The election is in May, so over the coming days, we will find out what measures will be supported by the opposition and passed before the election. There is also scant information in these announcements, so as always – the devil will be in the detail.

Digital Technology Adoption

Eligible businesses will be able to claim a deduction of $120 for every $100 spent on expenditure that supports digital adoption in their business. The examples used in the announcement were for expenditure on portable payment devices, cyber security systems, or subscriptions to cloud-based services. The additional 20% deduction will be capped at $100,000 per year and will be available from budget night.

Relevant deductible expenses that occur by 30th June 2022 can be claimed in the following year. Relevant deductible expenses incurred between 1st July 2022 and 30th June 2024 can be claimed in the year they are incurred.

Skills Training

Businesses will be able to claim a deduction of $120 for every $100 it spends on external training courses provided to their employees. The training will need to be provided by an entity registered in Australia, be either in person or online, and provided to employees in Australia. The additional 20% deduction will be available from budget night but there was no mention of it being capped. We will look out for the detail on that.

Relevant deductible expenses that occur by 30th June 2022 can be claimed in the following year. Relevant deductible expenses incurred between 1st July 2022 and 30th June 2024 can be claimed in the year they are incurred.

Low and Middle Income Earners Offset

The Low and Middle Income Earners offset has been increased to $1,500 for the 2022 tax year. If you are eligible for the additional $420, there will be no action required. Your payroll software should automatically update, and you will notice a variation in your take home pay.

Superannuation pension drawdowns - 50% reduction extended to 2022/23

The temporary reduction in minimum pension drawdown rates has been extended an additional year to 30th June 2023. The reduction for 2019, 2020, and 2021 was due to return to normal rates in 2022 but the announcement gives relief to SMSFs due to current market volatility and the SMSFs potentially finding it more difficult to have cash available to pay pensions. The reduction applies to Account-Based, Allocated, and Market Linked Pensions.

You can find the extended temporary reduction rates here - Minimum annual payments for super income streams | Australian Taxation Office (ato.gov.au)

Paid Parental Leave

The treasurer announced changes to parental leave in the 2022/2023 budget. Under the changes, a single parent will be eligible for a full 20 weeks of paid leave, while two-parent households can split the Paid Parental Leave however they like, provided they take it within two years of their child's birth. This is a significant change from previously where only the primary carer was eligible for up to 18 weeks and the secondary carer up to 2 weeks. In the changes announced, the paternal carer will now be able to access Paid Parental Leave at the same time as any employer funded leave. This was previously only available to the maternal carer.

Rapid Antigen Tests Deductibility

There were two measures announced in relation to Rapid Antigen test (RAT)expenditure incurred by individuals and businesses. Individuals will be able to claim a deduction for the cost incurred in taking a RAT if required to attend their workplace. In addition, a business will not be subject to Fringe Benefits Tax if the RATs are supplied to the employee by the business for the purpose of attending the workplace. These announcements will be retrospective and for expenditure from 1st July 2021.

As mentioned above these announcements are not yet law. When the budget announcements are legislated, and we have more detail we will provide further updates.