Make no mistake this is an election year Budget with no real losers and more importantly no vote losing announcements. In the Federal Budget 2022-23, the Government has put a heavy emphasis on infrastructure spend and support for business along with a few vote catchers.
A short term (six month) 50% reduction in fuel excise on all fuel and petroleum-based products (excluding aviation fuels) is certainly a vote catcher and targeted at the consumer. For businesses, there may be some saving, but it will be somewhat dampened due to the expected reduction in the fuel tax credit rebate in line with the fuel excise reduction.
The Budget included two short term initiatives/boosts for small businesses (<$50M turnover) by providing an extra 20% deduction on expenditure for:
This means for every $100 spend, you will be eligible to claim $120 as a deduction. Under both initiatives, the bonus deduction for expenditure incurred since the announcement and prior to 30 June 2022 will be claimable in the 2022/23 tax year, otherwise it is claimable in the year incurred.
Rebuilding and transforming our manufacturing capabilities has been an initiative of the Government’s and in line with this they have announced additional funding to: transform our manufacturing capability.
An additional $328.3 million over five years has been allocated to further support the Modern Manufacturing Strategy and National Manufacturing Priorities (NMP) and address critical supply chain vulnerabilities and includes:
Some employer support was included in the Budget aimed at rectifying the skills shortage and included:
The Budget announced several initiatives to reduce red tape and simplify business reporting requirements. One of these initiatives is the development of IT infrastructure that will allow Single Touch Payroll (STP) data to be shared with states and territories facilitating the prefilling of payroll tax returns and improving compliance.
Funding for this measure has already been provided for by the Federal Government with trials in place with a number of State and Territory Governments in relation to the use of STP data. The Federal Government is on track to complete its IT system implementation by late 2023.
The funding will be deployed following further consideration of which State and Territory Revenue Offices are able and willing to make investment in their own systems and administrative processes to pre-fill payroll tax returns with STP data.
The Federal Government expects this initiative will improve lodgement accuracy, reduce compliance costs and save time for approximately 170,000 businesses with payroll tax reporting obligations.
However, we believe that employers will still need to be able to verify the accuracy of the information being lodged with the State and Territory Revenue Offices using STP data. Where the payroll tax lodgement values differ from the STP data this may lead to a new compliance focus for the State and Territory Revenue Offices.
Other areas of simplified reporting this Budget addresses include:
The costs of taking a COVID-19 test to attend a place of work are tax deductible for individuals from 1 July 2021. In making these costs tax deductible, the Government will also ensure fringe benefits tax (FBT) will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose under the otherwise deductible rule.
The Budget has allocated funding for a reform of insolvency arrangements including such things as:
Some of the announcements are scant on detail and as always, the devil is in the detail.
Check out the full coverage from the Federal Budget 2022-23, which will continue to develop throughout the week as new insights and video content are published.