Federal Budget November 2022 -- What's in it for SMEs?

Budget rundown

New Federal Treasurer Jim Chalmers delivered a budget that was, in all honesty, pretty much what was expected by business analysts and economists, with a strong focus on social issues such the cost of living, housing shortages and of course, the economy, which definitely needs some life support right now.

There’s not much in the way of BIG news for small business, but there are some changes to FBT, paid parental leave, superannuation and the ATO’s crackdown on compliance that you need to know about. Here’s a quick rundown.

By ATB Partners 

So what's in it for business?

Let’s start with the good news – a $15.1 million investment over two years from 1 January 2023 until 31 December 2024, extending the Small Business Debt Helpline and the New Access for Small Business Owners programs, to support the financial and mental wellbeing of small business owners.

This will help the sector, particularly right now on the back of Covid and as the economic outlook remains uncertain. Costs are rising too – in particular for transport, insurance, people and energy.

While the Federal Government has put a lot in the budget to reflect the rising cost of living  impact on households, it has not done a lot to reflect the impact of rising costs on business (for now). It’s no secret that small businesses are under pressure, and they also have an important role to play in Australia’s economic recovery, so it’s welcome to see these support initiatives for business owners.

The push towards cleaner, greener energy

To advance the government’s commitment to clean energy, SMEs will be offered energy efficiency grants from the Federal Government which will allow small and medium-sized businesses to upgrade their energy systems. We’ve talked about this ad nauseum … Solar is a fantastic idea… BUT it’s also a significant investment, so think carefully before you take the leap. We can help you work through the numbers, so call us to discuss if you’re considering transitioning.

The Government is also introducing FBT exemptions and import tariff exemptions for battery, hydrogen fuel cell and plug-in hybrid electric cars if they have a first retail price below the luxury car tax threshold for fuel-efficient cars. It’s important to note that employers will need to include exempt electric car fringe benefits in an employee’s reportable fringe benefits amount. These changes will be effective from 1July 2022.

We’ve already written about the draft legislative changes and will keep you up to date as the finer details become known.

Assistance for Apprenticeships

The Federal Government is also making significant investments in providing apprenticeship grants and free TAFE for eligible applicants – this will be of benefit to those companies who employ apprentices. In particular there is a strong focus in this package on providing apprenticeships in the clean energy sector.

Paid Parental Leave

Small Businesses need to gear up for changes to Paid Parental Leave coming into effect from 1 July next year.

The changes will make the Paid Parental Leave Scheme flexible for families.

This will mean that either parent is able to claim the payment and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria.

Parents will also be able to claim weeks of the payment concurrently — meaning they can take leave at the same time.

From 1 July 2024, the Federal Government will start expanding the scheme by two additional weeks per year, each year, until it reaches a full 26 weeks from 1 July 2026.

Small businesses need to prepare for this, especially around managing employee absences.

Legacy items

The Federal Government will NOT proceed with certain legacy tax and super measures that were announced but not legislated by the previous (Morrison/Frydenberg) Government, notably, the proposed measure to change the annual audit requirement for certain self-managed superannuation funds (‘SMSFs’)  and the proposed limit of $10,000 for cash payments made to businesses for goods and services.

The proposal to allow taxpayers to self-assess the effective life of intangible depreciating assets is also being reversed – which means that status quo will remain (these asset values will continue to be set by statute).

Changes to Super

A couple of announcements mean changes to super, in particular, the rules around downsizer contributions. The age eligibility will come down from 60 to 55 years of age. These contributions allow people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home.

Both members of a couple can contribute, and contributions do not count towards non-concessional contribution caps.

If you’re not getting financial planning advice, then book an appointment with our team at ATB Wealth to discuss these measures and your overall future financial planning.

As the economic outlook remains uncertain, and will for a little while to come, it’s critical to have appropriate wealth management and wealth protection strategies in place.

Digital Currencies

The Budget mooted legislation that will provide more certainty around Digital Currencies (like Bitcoin) to further clarify tax treatments of these. Stay tuned for more details in the coming weeks.


More resources for the ATO and an increase in fines

The Government will increase the amount of the Commonwealth penalty unit from $222 to $275, from 1 January 2023. Penalty units are used to determine the amount payable for fines under Commonwealth laws, including tax offences, which just puts more onus on businesses to make sure they get specialist tax advice and avoid any issues with the Australian Tax Office.

ATO funding has also been boosted to extend the Personal Income Taxation Compliance Program. To crack down on ‘dodgy’ tax agents  and crackdown on the Shadow economy, also known as the ‘black economy’.

Audit Insurance -- more important than ever before

While we all agree that getting rid of substandard tax agents who can do more harm than good stamping out the black economy is a good idea, as is having the resources to catch tax cheats, it also means that audits are likely to increase further, and it’s a misnomer to think that you have to have done something ‘wrong’ to be audited.

Any individual or business can be chosen for a random audit. If you haven’t got ‘audit insurance’ now is the time to get it – it will cover many of the potentially significant costs of getting forensic accountants or legal representation should you need it, and just gives you peace of mind that you can pull in specialist resources if you need them.

We recommend audit insurance to all our clients, renewable on an annual basis – worth having as the ATO continues its sharp focus on compliance.

Over the coming weeks we will expand on these budget measures further – keep an eye out for our regular articles, published on the website, social media updates – facebook and LinkedIn and the newsletters delivered to your email inbox.

In the meantime, if you have any questions or concerns, contact us.


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