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Benefits of the 2022-2023 Federal Budget Update: 10 Ways It Will Help Your Business

federal budget update

Thanks to the two new tax deductions proposed by the government, tech upgrades and digital skills training emerged as key items for the 2022-2023 federal budget update.

The two policies include a Small Business Technology Investment Boost and the Small Business Skills and Training Boost. The dual purpose of these policies is to encourage investment in small businesses as well as prepare them to participate in an increasingly digital economy.

We have provided a quick overview of the two policies and 8 other ways the federal budget update will support your small business. 

Read along to make use of them and stay ahead of the game. 

Table of Contents

1. A boost in technology with the Small Business Technology Investment Boost

If you want to invest in technology, now is the time with the Small Business Technology Investment Boost.

If you’re a small business with less than $50 million annual turnover you’ll be able to deduct an additional 20% of the cost incurred on your business expenses that support your digital goals.

Wondering what the 20% can be used for? Here are some examples:

  • Portable payment devices
  • Cyber security systems
  • E-commerce platforms 
  • Subscriptions to cloud‐based services – For example, Lawpath’s 100% Online Customisable Legal Documents
  • Claim the costs of next-generation websites and new laptops

If you want to strengthen your technological capacities or simply re-generate your business’s website, now is the time with the 20% tax deduction. For example, if your business spends $100 on training your employees, you will be able to receive a $120 tax deduction. 

The deduction will apply to purchases made between 7:30 pm on 29 March 2022 until the 30th June 2023 and has a limit of $100,000 expenses per year.

2. Boost skills and training with the Skills and Training Boost

Did you think the 20% deduction only applied to technology investments? 

Think again. The budget also extends external training courses with the Small Business Skills and Training Boost.

This federal budget update will allow your small business to deduct 20% of any expenses you incur by providing external training courses to your employees.

Here are a few things to be mindful of when using this 20% deduction: 

  • It needs to be provided to employees in Australia or online
  • The external training needs to be delivered by a registered entity in Australia
  • You can offer the external training through RTOS registered with the Australian Skills Quality Authority
  • Training can be offered through the Tertiary Education Quality and Standards Agency
  • The 20% tax deduction doesn’t apply to in-house or on-the-job training

If you’ve been considering training your employees, now is the time. All you will need to do is submit an expense claim to claim the bonus. 

The bonus will apply to purchases made between Tuesday night and the end of the 2021-2022 financial year.

3. Support for young tradies to complete apprenticeships 

If you’re a tradie or a small business owner who hires tradies, the federal budget update has excellent news for you.

A new streamlined Australian Apprenticeships Incentive System is introduced, extending the current wage subsidy programs around apprenticeships. 

This new system aims to create a clear pathway to develop apprentices in priority trades. Other than this, the federal budget update has provided a fresh $2.5 billion to support this initiative. 

How will this benefit your business? Good question. 

The $2.5 billion can:

  • Help young Australian tradies complete their apprenticeships
  • Your small business will be rewarded for hiring tradies – $15,000 in wage subsidies for employers who take on tradies
  • It simplifies the current system of incentives in place 
  • Support for your business to upskill your employees

If you have more questions about this offer, why not hire a lawyer to receive more information.

4. Better taxing regulations – Cutting red tape

Are the tax obligations the last thing you think about in your small business?  

With the federal budget update and the new PAYG system, it may be the first thing you consider.

Australia’s updated PAYG system will make completing your taxing obligations and business administration tasks that much easier. This will be done by reducing the associated red tape, which will offer your business some cash flow.

That isn’t the only benefit. The other benefits of the new system include:

  • Support the prefill of some income tax returns and activity statements
  • Using technology to help reduce compliance costs 
  • It will enhance short-term cash flow for your small businesses
  • Improve processing times for your small business and other family businesses 

 All the benefits above will make your business tax obligations a smooth process.

5. Instant asset write-off extension

The next benefit for your business due to the federal budget update is the Government’s instant asset write-off scheme’s eligibility criteria.

This scheme aims to encourage small business investments to fuel their growth and fund new purchases.

So if you’re an eligible business, you can claim an instant deduction in your business’s portion of the cost of an asset in the first year your asset is used or installed all ready for use. 

You can use the instant asset write-off for:

  • Multiple assets
  • New and second-hand assets 

The scheme has been extended until 30 June 2023, a big win for small businesses (with a total income of less than $5 billion).

6. Assistance with the cost of living measures

Living and running a business in Australia can sometimes be very costly. 

This is why, as well as the direct benefits to small businesses, the federal budget provides indirect boosts through different cost measures. 

Let’s go through how these indirect measures may benefit you and your business: 

  • To ease the rising cost of living pressures, 6 million Australians will receive a $250 one-off payment
  • Pensioners, carers, veterans, job seekers, self-funded retirees, and concession cardholders will be eligible for the payment in April 2022
  • A one-time payment of $420 will be available to the 10 million taxpayers eligible for the Low and Middle Income Tax Offset
  • The cost of fuel will also be cut in half for the next 6 months

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7. Covid-19 recovery support: Federal Budget Update

There’s no doubt that Covid-19 placed some temporary pressure on small businesses. 

The Australian government considered this and has introduced some measures to support your flourishing business. 

Let’s go through the key measures in place by the federal budget update that will benefit your business:

  • The Australian Government has pledged $146 million to support the recovery of the Australian tourism sector in response to the pandemic
  • There will be support for small businesses providing travel agent services
  • $38 million will be allocated to the arts sectors. For example, music, performing arts, libraries, museums, print and independent cinemas to assist with its recovery
  • $80 million will go to supporting small and medium export businesses to help re-establish their businesses in overseas markets

So if you’re business has been directly impacted by Covid-19, these new measures are in place to support your recovery.

8. New procurement rules for small and medium-sized businesses

It’s not always easy for a small to medium-sized business to deal with Commonwealth Contracts. 

The rules aren’t always obvious, and small businesses could feel the pressure to agree to terms of a contract they’re not always happy with.

This is about to change with the new procurement rules to make it easier for small to medium-sized businesses to secure Commonwealth contracts. 

How will it benefit your business? Here is a list:

  • Government departments will be required to split up significant projects to give smaller contractors a greater opportunity to compete for the work
  • More opportunities for small businesses in the defence arena – Departments will be required to purchase directly from small businesses
  • Includes procurement contracts into more management tasks to even out the playing field for small businesses to get a chance to work
  • Changes to insurance requirements will support small business procurement participation

9. Mental health matters to small business owners

Employees struggling with their mental health are becoming more prevalent in the workplace. Now 1 in 5 Australians will experience mental illness every year. 

This is why the federal budget update has renewed funding for a critical mental health program tailored specifically to small business owners like yourself.  

The benefits include: 

  • An additional $4.6 million in funding
  • Beyond Blue’s New Access for Small Business Owners program will assist small business owners who need mental health support
  • Beyond blue will continue to offer free one-on-one telehealth sessions with specially trained mental health coaches 
  • Evidence-based advice on strategies for managing stress
  • Beyond Blue will provide 6 extra coaches to meet the needs of our small business community

10. Other federal budget update benefits for small businesses 

Other benefits of the federal budget update for your business include

  • Fuel excise – This is good news if you drive to work. For six months, the excise tax on petrol and diesel will be halved from 44 cents per litre to 22 cents per litre
  • Improved Connectivity – Business owners in rural, regional, and peri-urban areas will benefit from an upgrade to NBN fixed wireless services
  • Access to expert advice – The Australian Small Business and Family Enterprise Ombudsman will receive $8 million to provide business planning, capacity building, and financial literacy services
  • Fair Work Commission – There will be a dedicated unit at the Fair Work Commission to assist small businesses with issues such as unfair dismissal and general protections
  • Small Business Debt Helpline – $2.1 million has been allocated to extend the Small Business Debt Helpline
  • Fees – The fees associated with Australia’s business registers will be streamlined, including the removal of the annual late review fee

Key takeaways 

If your business wants to try new digital upgrades and train your employees, there’s no better time than now.

The incentives will allow your business to explore, expand and trial different projects to increase your business’s value. The federal budget update will support all your needs. 

For example, you can purchase a Lawpath subscription from anywhere in Australia and claim 120% of the cost back in your tax return. 

Moreover, ​ if you’re a sole trader, micro-business or small business based in Victoria, this is your chance to claim a $1200 rebate. Lawpath is proud to partner with the Victorian Government to help small businesses adapt to the digital landscape. Learn more about the rebate here

To summarise, the key benefits for your business from the federal budget update are:

  1. A boost in technology with the Small Business Technology Investment Boost
  2. Boost skills and training with the Skills and Training Boost
  3. Support for young tradies to complete apprenticeships
  4. Better taxing regulations – Cutting red tape
  5. Instant asset write-off extension
  6. Assistance with the cost of living measures
  7. Covid-19 recovery support
  8. New procurement rules for small and medium-sized businesses
  9. Mental health matters to small business owners
  10. Other federal budget update benefits for small businesses

If you want to learn more about how you can use the new incentives to assist your business, our consultants will be more than happy to answer your questions.

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