Takeaways from the federal budget
The 2022-23 federal budget has been handed down. We know our clients are eager to learn which measures will impact their tax or business and when (assuming all are adopted post-election, of course).
We have you covered!
Lachlan Munro, GrowthMD accountant, has reviewed the specific impact of these measures with context suitable to our GrowthMD client group. Please watch below for the recap and details below for each measure.
For our business clients
Digital Adoption Targeted tax benefits for businesses spending on technology (Effective now to June 2023)
Why
- Aimed to incentivise small business investment in digital assets and expenses by way of a 120% magnified tax deduction.
What
- For every $1 of spending on digitalisation, businesses will receive a $1.20 tax deduction - Eligible expenditure includes items such as portable payment devices, cyber security systems and subscriptions to cloud-based services - We are working on providing our clients with a more detailed list of eligible expenditure items in the coming weeks.
How it helps you
- We consider this measure relevant for our GrowthMD clients who already incur ongoing digital subscriptions, as well as those who are on the fence regarding larger-scale upgrades to IT software - The extended temporary full expensing of assets will partner well with this new measure to make any digital asset investment more affordable.
Be mindful of
Deductibility on spending before 30 June 2022 will be taken up in the 2023 financial year, so expect any spend occurring in the next few months to generate cash tax reductions or credits that may not be seen until later in 2023 or early 2024.
Small Business External Training
Targeted tax benefits for employer spending on training (Effective now to June 2023)
Why
- Aimed to look at improving the skilled workforce in Australia (and supporting the training bodies).
What
- An equivalent 120% magnified tax deductibility will apply to courses and seminars incurred by businesses (where delivered by external Australian registered providers).
How it helps you
- For those GrowthMD clients who incur the cost of CPD on behalf of their employees, this will see an uplift in your tax benefit and slightly reduce the “real cost” of training. - Businesses may consider the advantage of taking up more regular training and course work in the next financial year to further improve their workforce. With employment as the highest cost to most GrowthMD business clients on average, these incentives will hopefully improve staff retention rates and performance over the next few years.
Be mindful of
- Deductibility on spending before 30 June 2022 will be taken up in the 2023 financial year, so expect any spend occurring in the next few months to generate cash tax reductions or credits that may not be seen until later in 2023 or early 2024.
Apprentice Wage Subsidy Employer benefits for apprentice engagement & completion (Effective July 2022)
Why
- To encourage employers to consider offering apprenticeships to either existing or new staff within their business.
What
- A support payment of $5,000 to the employee and a partial reimbursement of up to $15,000 in wages for employers will be implemented to develop opportunities in the sector. These measures are relevant to any “priority occupation” apprentice or an employer considering hiring one. [Source – Australian Department of Education, Skills and Employment, Australian Apprenticeship Priority List]
How it helps you
- Our clients will find this most relevant if currently employing (or considering employing) anyone studying an apprenticeship in Dental Assistance, Nursing, Aged Care, Child Care or Disability Care. If this is not currently you, but you are considering the benefit of these in-demand skills, this may be the year to start investing in new apprentices for your business. The measure extends on existing subsidies and is a good catalyst for businesses to consider the relevance with respect to their future planning.
Be mindful of
- Subsidies are offered at 10% of wages for first- and second-year apprentices, reducing to 5% for third years. The reimbursement is also capped at $15,000 per apprentice so keep this in mind when planning for the ongoing benefits.
For individuals
Tax Offsets An increase of $420 to the Low and Middle Income Tax Offset (Effective only for the year ending 30 June 2022)
Why
- To facilitate spending and improve cash flow for the bulk of Australian taxpayers.
What
- Australians will see an increase to the previously implemented LMITO tax offset when lodging their 2022 income tax return - Applicable to individuals whose taxable income will fall between $37,001 and $126,000 this year
How it helps
- The maximum benefit (inclusive of the already existing offset) will be $1,500 on a taxable income between $48,000 - $90,000 - Individuals will not have to provide anything additional to receive this amount, and any refunded offset will be included in your next annual tax assessment.
Be mindful of
- This is currently planned as a one-off, and the offset is not currently planned to increase after the 2022 financial year.
* For GrowthMD clients, we will include this offset in your 2022 tax planning presentation.
Cost of Living Pressure
A one-off payment of $250 for individuals in relevant sectors (Payment in April 2022)
Why
- To ease the burden of increasing everyday costs for those currently receiving government support payments.
What
- Individuals currently receiving government allowances, pensions and those on certain concession cards will automatically receive a tax-exempt $250 payment from Centrelink. This also includes welfare recipients, veterans and students.
How it helps you
- We are aware that most GrowthMD clients will not be eligible for this payment; however, you may wish to advise your family members to look out for their payments - Individuals receiving Youth Allowance should expect these payments and those who hold Pensioner cards, Commonwealth Seniors health cards, and Veteran Gold cards.
Be mindful of
- The payment can only be received once per individual irrespective of multiple allowances/pensions. It will, however, not count towards any assessable income for social security test purposes.
Paid Parental Leave A change to the flexibility in parental leave for both mums and dads (Effective March 2023)
Why
- To improve previously existing support for new parents who aim to share time off from work.
What
- Previously, paid parental leave from Centrelink provided 18 weeks leave for primary carers and two additional weeks leave as dad and partner pay. Families will now have access to a shared total of 20 weeks' leave - Eligibility to this government payment will also be broadened to any household income that falls under $350,000.
How it helps you
- This will provide greater flexibility for new parents who aim to share time off from work. Single parents will also be able to draw on a total of 20 weeks.
Be mindful of
- Employing clients may also need to adopt workplace leave schedules to embrace the new shared leave measure.
The majority of these budget measures are effective in the coming months and will be advantageous to consider for tax planning purposes. We will be covering these measures will you in our upcoming tax planning sessions.
Please do contact us in the meantime if you have any questions or would like more information.