2022 Federal Budget Summary

01/04/2022 |

Treasurer Josh Frydenberg delivered his budget on the 29th of March, which focused mainly on funding measures and offering taxpayers some tax relief for the 2022 financial year. Critically, unemployment levels are at a record low, which will hopefully spearhead Australia’s recovery from the current global pandemic. This has also allowed the government to forecast a much more optimistic budget deficit over the next few years.

Here are a few key points from what was announced this week:

Increasing the Low and Medium Income Tax Offset – From 1 July 2021
- This will be increased to $1,500 for the 2022 financial year (was $1,080 previously).

Tax deductibility of COVID 19 Test expenses – From 1 July 2021
- The cost of work related COVID -19 tests (both Polymerase Chain Reaction and Rapid Antigen Tests) will be deductible to individuals
- For businesses incurring such expenses on behalf of their employees, no Fringe Benefits Tax will apply

Small Business skills and training boost – From 29 March 2022 to 20 June 2024
- Small businesses with an aggregated turnover of less than $50 million will be able to deduct an additional 20 percent of expenditure incurred on eligible external training courses provided to their employees.
- Some exclusions will apply, such as for in-house or on the job training and expenditure on external training courses for persons other than employees
- For eligible expenditure incurred in the 2022 financial year, the 20 percent boost will be claimable in the 2023 financial year.
- For eligible expenditure incurred during the 2023 and 2024 financial years, the 20 percent boost can be claimed immediately.

Small Business Technology Investment Boost – From 29 March 2022 to 30 June 2023
- Small businesses with an aggregated turnover of less than $50 million will be able to deduct an additional 20 percent of expenditure incurred on business expenses and depreciating assets that support their digital adoption up to an annual cap of $100,000.
- For eligible expenditure incurred in the 2022 financial year, the 20 percent boost will be claimable in the 2023 financial year.
- For eligible expenditure incurred during the 2023 financial year, the 20 percent boost can be claimed immediately.

Continuing to support Apprenticeships
- The Government has announced that it will support employers to engage and retain new apprentices and reform the Australian Apprenticeships system by:

Cost of living payment – Payments will commence from April 2022
- Certain taxpayers will receive a once off payment of $250 to assist with the higher cost of living brought about by the pandemic
- To be eligible, taxpayers must either be in receipt of certain Government pensions or allowances, or be a seniors card or concession card holder.
- For a full list of what these are please follow this link to the Services Australia website.

Employee Share Schemes (ESS) – Expanding Access and Reducing Red Tape so that employees at all levels can participate
- Unlisted companies will no longer have to comply with the standard regulatory requirements in the Corporations Act for operating a business offering shares and financial products to retail clients.
- 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 percent 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.

For a full overview of what was announced on Tuesday, please click on this link to download the official budget summary from the government.

As usual, if you have any further queries regarding the above, please do not hesitate to contact your usual HMH advisor on +61 3 9840 2200.

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