In a pre-election environment, the 2022 Federal Budget has provided a range of cost of living and business measures to encourage a post COVID-19 economic recovery.
The following provides the key points in relation to business, individuals and superannuation:
Business
Skills and training boost – for small business
Small businesses (with a turnover of less than $50 million) will be able to deduct an additional 20 per cent of expenditure incurred on external training courses provided to their employees. The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia.
This is applicable for expenditure incurring from 7:30pm on 29 March 2022 until 30 June 2024.
Technology investment boost – for small business
The Government has introduced a technology investment boost to support digital adoption by small businesses. Small businesses with a turnover of less than $50 million will be able to deduct an additional 20% of expenditure incurred on business expenses and depreciating assets that support their digital adoption up to an annual cap of $100,000 of expenditure.
This is applicable for eligible expenditure incurring from 7:30pm on 29 March 2022 until 30 June 2023.
COVID-19 business grants – non-assessable non-exempt income
The Government will extend the measure which enables payments from certain State and Territory COVID-19 business support programs to be made non-assessable non-exempt (NANE) for income tax purposes until 30 June 2022.
This is applicable for grant payments received in the 2020–21 and 2021–22 financial years.
Employee Share Schemes change – for unlisted companies
The Government has announced that it will expand access to employee share schemes (ESS) and participants of ESS in unlisted companies will be allowed to invest up to:
- $30,000 per participant per year, accruable for unexercised options for up to five years, plus 70% of dividends and cash bonuses; OR
- Any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.
There will also be a further reduction in red tape so that employees at all levels can participate in the scheme. Regulatory relief from the Corporations Act 2001 also extended to offers to independent contractors, where they do not have to pay for the interests.
Commencement date has not been announced.
Individuals
$250 cost of living payment
The Government will provide eligible recipients with a tax-exempt support payment of $250 to assist with higher cost of living pressures. The payments will be made in April 2022 and will be targeted to Australian residents who are recipients of particular social security payments and concession card holders.
Cost of living tax offset – LMITO increase
The Government will increase the low and middle income tax offset (LMITO) for the 2021–22 income year by $420 to $1,500. Unless the full offset is required to reduce a taxpayer’s tax liability to zero, all LMITO recipients will benefit from the full $420 increase. Income still needs to be blow $126,000 to qualify.
This is applicable for the 2021-22 income year.
Expansion to Home Guarantee Scheme
The Government has announced that it will expand the Home Guarantee Scheme:
- First Homebuyer. Increase the number of available from 10,000 to 35,000 guarantees each year for eligible first homebuyers to purchase a new or existing home with a deposit as low as 5%. This is available from 1 July 2022.
- Regional Home Guarantee. Establish a new Regional Home Guarantee which will provide 10,000 guarantees each year to support eligible homebuyers to purchase or construct a new home in regional areas. This is available from 1 October 2022 to 30 June 2025.
- Family Home Guarantee. Expand the Family Home Guarantee to provide 5,000 guarantees to support eligible single parents with children to buy their first home or to re-enter the housing market with a deposit of as little as 2%. This is available from 1 July 2022 to 30 June 2025.
Tax Deductibility of COVID 19 expenses
The Government confirmed that:
- The costs of taking a COVID-19 test (PCR and RAT) to attend a place of work is tax deductible for individuals.
- FBT will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose.
Available from 1 July 2021.
Temporary reduction in fuel excise
The Government announced a temporary relief from fuel price pressures by halving the excise and excise-equivalent customs duty rate that applies to petrol and diesel for six months.
This is applicable for six months from 30 March 2022 until 28 September 2022.
Superannuation
Superannuation pension drawdowns – 50% reduction extended
The temporary 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products will be extended a further year to 30 June 2023.
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2022. Please do not reproduce without the expressed written consent of the author.