Individuals
Increase to LMITO
It’s been an expensive year as the cost of living has skyrocketed, with rent prices rising, the cost of fuel soaring and grocery bills increasing. Some good news for individuals is that the Government has announced a once-off $420 cost of living tax offset for the 2022 income year. This will be provided in the form of an increase to the existing Low and Middle Income Tax Offset (LMITO). That means that the current maximum LMITO benefit will be increased to $1,500 for individuals and $3,000 for couples. It will be automatically included on individual tax returns for the 2022 income year, meaning it will be paid when the tax return is submitted.
So how much can you expect to receive? It all depends on your income. The LMITO entitlement is proposed to be increased as follows:
Businesses
Technology Investment Boost
If you’ve been holding off on upgrading your computer equipment, now is the time to do so! The Government is introducing a technology investment boost to support small and medium-sized businesses with digital adoption. This boost will apply to eligible expenditure incurred from Budget Night (29 March 2022) until 30 June 2023.
Small and medium-sized businesses will be able to deduct an additional 20% of expenditure incurred on business expenses and depreciating assets that support their adoption of digitalisation (some examples are cloud-based subscriptions, portable payment devices, cyber security systems etc.).
For example, if you spend $50,000 on upgrading your computer equipment you can claim an additional $10,000 deduction for it, meaning the total deduction will be $60,000. That’s an extra $10,000 you won’t have to pay tax on!
Unfortunately, there is an annual maximum additional deduction. Expenditure up to $100,000 annually will be eligible for the boost, meaning that the maximum additional deduction is $20,000 per year.
For expenditure incurred before 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2023, the boost will be claimed in the income year in which the expenditure is incurred.
Skills & Training Boost
External training for your employees can be expensive and often it just doesn’t seem affordable. However, a skills and training boost will be introduced to encourage and support small and medium-sized businesses to train and upskill their employees. The boost will apply from Budget Night (29 March 2022) until 30 June 2024.
Small and medium-sized businesses will be able to deduct an additional 20% of expenditure for external training courses provided to their employees. The external training courses must be provided to employees in Australia or online and delivered by entities registered in Australia.
For example, if you send five employees to a two-day machinery safety course for $1,100 each, the cost of the courses would be $5,500 but you’d be able to claim $6,600. That’s an additional $1,100 that you can claim, and $1,100 more that you don’t have to pay tax on!
Unfortunately, some exclusions will apply, for example, in-house or on-the-job training and expenditure on training courses for persons other than employees.
As with the technology investment boost, for expenditure incurred before 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2024, the boost will be claimed in the income year in which the expenditure is incurred.
Other Quick Notes
Covid-19
The cost of rapid antigen tests taken in order to work will be deductible for employees. FBT will not be incurred by businesses where Covid-19 tests are provided to employees.
Reduction of Fuel Tax Excise
The fuel tax excise will be reduced by 50% for six months from 30 March, which should result in lower fuel prices. Businesses who claim fuel tax credits will see a reduction in fuel tax credits to match the reduction in fuel tax excise.
Super Pension Payments
The 50% reduction of minimum pension requirements has been extended for another year to 30 June 2023.
Changes to Super for Employers & Employees
The $450 minimum monthly earnings requirement for employees to receive superannuation has been removed, meaning most employees will receive super regardless of their earnings. The super guarantee charge will also increase to 10.5% from 1 July 2022. However, for employees under 18, the requirement to work more than 30 hours per week before receiving super remains.