While the key theme of the 2022/2023 Budget was the cost of living, there were 5 top takeaways relevant to SMEs and the actions that need to be taken now.
- Re-evaluate your tax risks
- Focus on your employee training
- Invest in the digital
- Keep your eye on cash flow
- Look at digital tax reporting
1. Re-evaluate your tax risks
Are you in the firing line with increased funding for ATO audits for riskier, larger transactions and business?
With additional ATO funding to target large corporations, multinationals, private groups and high wealth individuals, it’s expected they will increase their tax collections by $2.1B over a three-year period.
This focus means that we can expect continued ATO review activity under programs including:
- Top 500 Private Groups
- Next 5000 Programs
- Division 7A
- Trusts
- Capital Gains
- And, International Dealings
2. Focus on your employee training
Can you make use of the Skills & Training Boosts to upskill your team, with financial support? Will the new Australian Apprentices Incentive System help your business?
SME businesses will be able to access an additional 20% deduction for the cost of external training courses provided to employees. While there is no financial cap, the course must be delivered by an Australian provider.
In an attempt to address the skills shortage affecting the ability of SMEs to hire and retain qualified talent, the Budget announced a plan to create the new Australian Apprentices Incentive System – a development designed to update and refine the approximately 30 different payments already available to employers and apprentices.
From July 1, 2022, the Australian Apprentices Incentive System will provide wage subsidies to businesses that take on trainees in priority fields. Employers will be eligible to claim up to $4,500 in the first year of the system, budget documents show.
Hiring incentives will also be made available for firms that employ apprentices in ‘non-priority’ occupations.
To sweeten the deal, apprentices will be eligible for $5,000 in training support payments, split into half-yearly instalments over two years.
3. Invest in digital
Is now the time to invest in technology considering the TFE and new technology boost?
With the current temporary full expensing (TFE) measures due to end on 30th June 2023, a new measure will allow SMEs a ‘boost’ to go digital. An additional 20% deduction will be allowed for expenses on digital adoption up to $100,000 per year. More information is required however, based on examples provided, the tax saving will be capped to $25,000 per year (at a 25% tax rate), deductions of costs incurred in FY 22 cannot be claimed until FY23, and any asset needs to be installed and ready for use by 30th June 2023.
Digital adoption expenses can include:
- Portable Payment Devices
- Cyber Security Systems
- Subscriptions to Cloud-based Services
4. Keep an eye on cash flow
How will reductions to fuel excise as well as GST and PAYG instalment increase your cash flow?
The Budget announced that the Government will temporarily halve the excise rate on petrol and diesel for 6 months.
For SMEs, the Budget also included a measure to reduce the GDP uplift factor on PAYG income tax and GST instalments (from 10% to 2%) for the 2023 income year. Your business will need less than $10 million annual aggregated turnover to be eligible for the lower GST instalment, and less than $50 million annual aggregated turnover will be eligible for the lower PAYG instalments.
5. Look at digital tax reporting
Can digitised tax reporting make your life easier, while making data matching easier for tax authorities?
While digitised tax reporting is designed to reduce your compliance costs, it also means more pre-filling, data-matching and data-sharing for the ATO and other revenue authorities. Continuing measures include:
- Sharing Single Touch Payroll (STP) information with revenue office to pre-fill payroll tax returns
- The option to report Taxable Payment Reporting data electronically at the same time as BAS
- Using real-time accounting data to calculate your PAYG tax instalments
Beyond Advisors offers professional advice for businesses of all shapes and sizes. For any help or assistance on the budget implications you can get in touch with our helpful team today.