How the 2022 Budget will affect small businesses

With a federal election on the horizon, it’s no surprise this year’s budget had one main goal in mind: providing some welcome –?but short-term –?relief to the soaring cost of living.

That said, alongside slashing fuel excise in half for the next six months, there were several noteworthy incentives and tax breaks aimed squarely at small businesses.

The most eye-catching of these was the technology investment boost.

Small business digital adaptation

This tax break means eligible businesses will be able to deduct $120 for every $100 (capped at $100,000) they spend on digital technologies such as cloud computing, e-invoicing, cyber security and web design up to 30 June 2023.

Even better, you can then claim the same deduction for every $100 spent on digital training and upskilling for staff up to 30 June 2024.

So, if you haven’t already, now might be a good time to invest in technology.

Pay-as-you-go (PAYG) changes

The federal government plans to change the formula used to calculate quarterly PAYG instalments and GST instalments, reducing the GDP ‘uplift’ rate from 10% to 2%.

This shift should help around 2.3 million small businesses and sole traders, freeing up an estimated $1.85 billion in collective cash flow, according to Treasury projections.

However, legislation needs to be passed in Parliament for the change to go ahead.

Boosting apprenticeships

The Boosting Apprenticeship Commencement (BAC) wage subsidy has been extended by three months to 30 June 2022. This program provides employers with a 50% wage subsidy support when taking on new apprentices in their first year (up to $28,000).

Employers can then access smaller subsidies in years two and three of the scheme.

Once BAC has ended, it will be replaced by a new Australian Apprenticeships Incentive Scheme. This provides wage subsidies to businesses that take on trainees in “priority” fields

Managing your tax affairs can be complicated. But it doesn’t have to be. Get in touch to see how Accounting Excellence can save you time, money and stress by emailing [email protected] or calling 0431 981 005.?

Please note that the information is correct at time of writing based on the Federal Budget released on Tuesday 29 March 2022. The information is intended to provide general information only and it is not designed to be a substitute for professional advice. If there is a change in Federal Government over the next 8 weeks, it would be expect a new Government would release their own updated Budget.?

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