Small businesses, families and motorists are some of the chief beneficiaries in the 2022-23 Federal Budget.

The government is focusing on incentivising small businesses that spend on upskilling employees and improving digital capabilities.

Families and low and middle income earners will also see some relief to the rising cost of living thanks to tax breaks and a temporary cut to the fuel excise.

Here are some of the key features of the targeted package of measures in Treasurer Josh Frydenberg’s latest budget.

Low and middle income tax offset (LMITO) extended

The low and middle income tax offset (LMITO) has been increased by $420 for the 2021–22 income year.

For taxpayers earning $37,000 or less, the base amount for this financial year has increased to $675. The full amount of the offset, for those earning a taxable income from $48,001–$90,000, is $1,500.

The offset then reduces by 3 cents for every dollar above $90,000.

Digital adoption boosts

The government is also strengthening its focus on digital technologies. It will provide an additional 20 per cent deduction to small businesses for expenses and depreciating assets which support digital adoption.

The deduction is subject to an annual expenditure cap of $100,000 for 2022 and 2023, which equates to a $5000 per year tax saving.

Changes to the annual uplift in the PAYG instalment system

Small businesses, sole traders and investors will get temporary tax relief to assist with cash flow.

The GDP uplift factor used for PAYG and GST instalments will change from 10 per cent to 2 per cent from the September 30, 2022 quarter and throughout 2023.

From January 1, 2024, businesses can also opt in to the government’s PAYG modernisation, which will better align PAYG instalments with their taxable income to provide cash flow benefits.

50% reduction in fuel excise for 6 months

The fuel excise has already been cut by 22 cents per litre for six months, as part of a pre-election measure to counter the rising cost petrol and ease the rising cost of living.

Australian motorists are seeing up to $20 in relief each time they fill up at the bowser.

Minimum super pension drawdowns halved for another year

Historically low interest rates have seen the government extend the reduction to the minimum drawdown on superannuation pensions for another financial year.

The minimum drawdown will be halved until June 30, 2023, continuing a change that has been applied since July 1, 2019.

Small business training bonus

Businesses with an annual turnover of less than $50 million will have access to a new bonus 20 per cent deduction for the cost of external training courses delivered to their employees by providers registered in Australia. A $1 spend on upskilling will equate to a $1.20 deduction.

Employee Share Schemes access expanded

The government will expand access to employee share schemes (ESS), which help small businesses attract, retain and motivate staff with an opportunity to invest in the company.

The red tape and complexity around the current ESS framework will also be reduced to make the rules easier to follow.

COVID-19 Response Package

Certain payments from state and territory COVID-19 business support programs will be made non-assessable non-exempt, and the costs of taking a COVID-19 test to attend a workplace will be tax deductible for individuals from July 1, 2021.

Tax administration changes

While the ATO has already been sharing Single Touch Payroll (STP) data with Services Australia, it will now share additional information so employer details will be pre-filled for people who are on an income support payment.

The government also plans to digitise trust and beneficiary income reporting and processing.

Speak to the tax experts at LDB

If you need help navigating any of these new tax incentives or if you’d like to find out more about how the Federal Budget will impact your personal or business finances, speak to one of our experts.

LDB has a team of trusted tax advisors, real estate and property specialists, and business advisory experts that can guide you on a range of matters.

Simply give us a call on (03) 9875 2900 or fill in the contact form below.