2022-23 Federal Budget - The important parts

On 29 March 2022 the Federal Government announced their 2022-23 budget. Here are the important tax-related changes that are coming.

Low and Middle Income Tax Offset Increase

The maximum Low and Middle Income Tax Offset benefit will increase from $1,080 to $1,500 for individuals (or $3,000 for couples) for the 2021-22 income year. Consistent with the current Low and Middle Income Tax Offset, taxpayers with incomes of $126,000 or more will not receive the additional offset.

See my previous blog post about what the Low and Middle Income Tax Offset is.

https://www.herveybaytax.com/post/so-what-is-the-low-and-middle-income-tax-offset-lmito

Small Business Technology Investment Boost

Small businesses (with less than $50m aggregated turnover) will be eligible to claim a 130% tax deduction for expenses and depreciating assets to support digital adoption including:

- Cyber security systems,

- Cloud-based service subcriptions; and

- Portable payment devices.

This will be capped at $100,000 per annum of eligible expenditure.

Deductions will be allowable on expenditure that occurs from 7.30pm AEDT 29 March 2022 until 30 June 2023. For expenditure between 29 March 2022 and 30 June 2022, the deduction will not be available until the 2022-23 financial year tax return.

Small Business Skills and Training Boost

Similarly to the Small Business Technology Investment Boost, small businesses will be eligible to claim a 120% deduction of the cost of eligible courses to train new employees, or to upskill existing employees. External training courses must be provided to employees in Australia or online, delivered by entities registered in Australia.

Deductions will be allowable on expenditure that occurs from 7.30pm AEDT 29 March 2022 until 30 June 2024. For expenditure between 20 March 2022 and 30 June 2022, the deduction will not be available until the 2022-23 financial year tax return. For expenditure in the 2023 and 2024 tax years, the deductions will be available in the year that the expense is incurred.

Note: further information regarding what expenses and training will be eligible and any further requirements for the Small Business Technology Investment Boost and the Small Business Skills and Training Boost is not currently available. It is expected that once the budget is implemented further information will be provided.

PAYG Instalment Changes

Starting from 1 January 2024, the Pay As You Go Instalment system will be modernised so that instalments are based on current financial performance as recorded in the business' accounting software, rather than an estimate based on prior year performance. There will also be changes to the formula in which instalments are calculated (GDP uplift factor).

Temporary Fuel Excise Cut

Fuel excise is a flat tax levied by the Federal Government on petrol, diesel and all fuel and petrol based products. The current rate is 44.2 cents per litre.

In response to the recent spike in fuel prices, the Government has announced a temporary cut to this fuel excise on all fuel and petrol based products, with the exception of aviation fuel.

This should result in a reduction of at least 22.1 cents per litre for consumers and businesses. The ACCC will monitor the petrol retailers to ensure that the full benefit of the reduced excise is passed on to consumers.

This measure will apply from 30 March 2022 to 28 September 2022.

I hope you enjoyed this blog post. Stay tuned for more engaging posts.

Thanks, Cassie from Hervey Bay Tax Solutions