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As an election looms, the Treasurer took few risks with the budget. The profession reacts to the headline measures.
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Budget 2022: The tax verdict
29 March 2022
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Training and technology: $120 tax deduction for every $100 spent on digital technology or training by small business
“The main headline grabber is the Technology Investment Boost, which gives businesses with an annual turnover of less than $50 million the ability to deduct an extra 20 per cent of the cost of expenses that support their digital uptake. Businesses will be able to claim the additional deduction on up to $100,000 of expenditure a year.”
- Mark Chapman, H&R Block director of tax and communication
“One is for upskilling and the other one is for expenses associated with digital uptake. Effectively, for every dollar you spend on expenses or assets associated with digital take-up, you’re going to get $1.20 worth of deductions. It’s almost like an investment allowance.
“There’s a catch. Anything spent between tonight and the 30 June 22 will have to be carried forward to the next financial year. So there’s no incentive to go out and do it right now.”
- Tony Greco, IPA general manager technical
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“If you put the two together – if you invest in technology, you need to have training. So they’re getting a boost on technology investment, and a boost on the training that goes into the technology.
“The technology boost goes until June 2023 and the skills one for two years. I think they’re very good programs, but the technology support could be made permanent given the importance of digital to small business success.”
- Gavan Ord, CPA Australia senior manager business and investment policy
“The 20 per cent deduction for technologies and training is a good thing for small business. The only negative is that they are temporary. There has been too much focus on temporary measures in recent years, rather than actually fixing our broken system.”
- Scott Treatt, Tax Institute general manager, tax policy and advocacy
$9.9bn investment in offensive and defensive cyber capabilities
“Russia’s invasion of the Ukraine has increased the likelihood of cyber attacks on Australian businesses. CPA Australia research shows that Australian small businesses are among the least prepared in the Asia-Pacific region to withstand a cyber-attack. It’s extremely disappointing that more isn’t being done to help small businesses manage their cyber risk. After all, when it comes to cybersecurity, your defences are only as good as your weakest link.”
- Dr Jane Rennie, CPA Australia general manager external affairs
50% cut to fuel excise
“It’s going to be interesting to see after six months when the discount of half the excise is supposed to come off, but will the world price of fuel have gone down? And if it hasn’t, what are they going to do? Everybody will be paying more for petrol again.”
“The fuel excise is used to fund infrastructure for the roads, and if they can’t get the money from there, it’s going to come from somewhere else.”
- Lance Cunningham, national tax technical leader at BDO
“The ACCC will be keen to ensure the fuel excise cut flows-through to consumers. But from a business perspective fuel is just one of many costs and for some, fuel tax credits have been available anyway.”
- Michael Croker, CA ANZ tax leader
“It will help business because obviously fuel is a big input cost to many businesses. They hope that will temporarily reduce inflation pressures, although there’s a risk that a rise in petrol prices could wipe that out overnight.”
- Gavan Ord, CPA Australia senior manager business and investment policy
$420 cost of living tax offset and $250 cost of living payment …
… but no extension to the low to middle income tax offset
“LMITO for 2023 is not happening – and it’s nowhere in the Budget papers because it was temporary. It’s a big number, so they’ve banked that!”
“There’s people already saying that by not extending it that equates to a tax increase. But remember, in stage two it was brought forward, and they doubled up because of COVID.”
- Tony Greco, IPA general manager technical
“The cost of living offset has the same issue as LMITO – you have to be paying tax to benefit and it’s not refundable if you end up with no tax payable.
- Scott Treatt, Tax Institute general manager, tax policy and advocacy
“The increased LMITO will bring relief to many Australians within months. Temporary support measures have a way of outstaying their welcome; we’re pleased the government is signalling that this is the final year for the LMITO.”
- Dr Jane Rennie, CPA Australia general manager external affairs
“Everyone was talking about whether they would extend the LMITO for another year but they haven’t done that. It’s an election sweetener, although people won’t get it until they lodge their tax refund for 2022.”
- Lance Cunningham, national tax technical leader at BDO
Expansion to employee share schemes
“Reducing red tape for employee share schemes will make it easier for Australia’s budding technology companies to be globally competitive in attracting and retain skilled employees.”
- Cherelle Murphy, EY chief economist
“Further reforms to employee share schemes will make it easier for Australian start-ups to compete for talent – and reward employees for their contributions to the success of their organisation.
“These reforms recognise not only that the war for talent has never been so fierce, but also that emerging Australian businesses have an enormous positive mark to make on our economy – and we need to give them every opportunity to succeed and compete globally.”
- Tom Seymour, PwC chief executive
“They’ve changed employee share schemes in relation to salary sacrifice. Currently, it’s a concession so that you can have get up to $5,000 on a discount amount that you can get through that scheme. They’ve changed it so that will be a concession for $30,000 of salary sacrifice amount.
“That makes it much more flexible, I think, although we don’t have the detail about exactly how it works.”
- Lance Cunningham, national tax technical leader at BDO
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