On Tuesday, 29 March 2022, Treasurer Josh Frydenberg handed down the 2022-23 Federal Budget, his 4th Budget. In an election Budget, the Treasurer announced a range of measures aimed at small businesses and individuals. Since the Mid-Year Economic and Fiscal Outlook (MYEFO) in December 2021, the government noted that the underlying cash balance has improved by $103.6bn over the 5 years to 2025-26. Nevertheless, a record deficit of $79.8bn for 2021-22 and $78.0bn for 2022-23 is expected. Net debt of $714.9bn for 2022-23 is forecast to rise to $864.7bn in 2025-26.
The following small business-related measures were announced:
- Small business 20% deduction boost: skills training and digital adoption – businesses with turnover less than $50m will receive a 20% uplift on deductions for eligible expenditure on external training courses and digital technology. The 20% boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024 (for skills training) and 30 June 2023 (for digital adoption).
- Patent box income extended – the concessional tax treatment for eligible corporate income associated with new patents in the medical and biotechnology sectors will be extended to corporate taxpayers who commercialise their: (i) eligible patents linked to agricultural and veterinary chemical products; and (ii) patented technologies which have the potential to lower emissions.
- PAYG instalments option – from 1 January 2024, companies will be allowed to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software (with some tax adjustments).
- PAYG and GST instalment uplift factor – the GDP uplift factor for PAYG and GST instalments will be set at 2% for the 2022-23 income year, which the government states is lower than the 10% that would have applied under the statutory formula.
- Employee share schemes – for company law purposes, the investment thresholds for unlisted companies will be changed so that ESS participants can invest up to $30,000 per participant per year (accruable for unexercised options for up to 5 years), plus 70% of dividends and cash bonuses. Participants will also be able to invest any amount if it would allow them to immediately take advantage of a planned sale or listing of the company.
- More COVID-19 business grants designated NANE – certain NSW, SA and Qld COVID-19 business support programs will be made non-assessable non-exempt (NANE) for income tax purposes until 30 June 2022.
