Federal Budget Checklist for Small Businesses

The COVID-19 pandemic hit many small businesses hard financially in Australia. Lack of business, skill shortage and high inflation forced many of them to shut shop, or placed additional pressures on people to work around the clock to get jobs done. As the severity of the pandemic is dying down and the economy shows signs of recovery, small businesses in Australia have high hopes. The Federal Budget 2022 came as a respite for small businesses who are looking for ways to boost business and operations as they plan for a better future. 

In this write-up, we will discuss some of the distinguishing features of the federal budget that can provide significant relief to Australia’s small business community. Check the list below to see which elements of the budget your business can take advantage of now!

1. The Australian government is keen to give a digital boost to small businesses. The businesses can now claim bonus tax deductions on eligible digital expenses. Companies can claim 20% (up to AU$10,000) on expenses like servers and laptops. Companies can also claim a 20% deduction to upgrade the skills of their employees through skill enhancement programs like cyber security, web design and cloud computing.
   
   
2. The government will spend AU$2.8 billion to boost employee retention and apprentice uptake in cases of skill shortages. Keeping this in mind, the government has started the Australian Apprenticeship Incentive System, which focuses on providing wage subsidies to businesses hiring trainees in ‘priority fields’. It’s a breather for SMEs which were concerned about the end of the Boosting Apprenticeships Commencements scheme and the subsidies it offered.
   
   
3. With a view to cover developments in low-emission technologies and agriculture, the government has made them part of the ‘patent box’ scheme. The scheme initially had income from Australia-born medical and biotech patents to be taxed at 17%. The same rate of tax for climate-focused tech is expected to encourage climate-focused innovations in the country.
   
   
4. The government has also proposed the GDP ‘uplift’ reduction rate from 10% to 2%. The budget underlines the initiative would improve cashflow of nearly 2.3 million cash-paying businesses. These changes regarding the business cashflow are based on pay-as-you-go tax calculations.
   
   
5. The low and middle income tax offset (LMITO) has also got a boost for this financial year. A change that may be exclusive only to this financial year is a $420 cost of living boost. The move will help workers to get AU$1,500 tax relief.
   
   
6. The budget has a sharp focus on developing women’s entrepreneurship skills and encouraging them to take decisive positions in certain industries. The federal government has earmarked funding of $56.2 million for programs assisting women to take positions in the manufacturing and technology industries. Programs targeting the development of entrepreneurial skills in women have also special mentions in the budget.
   
   
7. The paid parental leave scheme also saw some structural changes in the budget. Though it has the same number of weeks of leave (20 weeks) as earlier, now the entire leave will be paid and will be completely shareable between eligible parents. Earlier, it was 18 weeks of paid leave and two weeks of dad and partner pay. However, despite growing calls from the industry, superannuation contributions won’t apply to parental leave.
   
   
8. A step that has given some respite to drivers is a cut in fuel excise on petrol and diesel, which has been halved from 44.2 cents a litre to 22.1 cents a litre. The reduction has been done for the six months to September. The budget also mentions the Australian Consumer and Competition Commission must enforce the new directive on retailers.
   
   
9. Floods in Eastern Australia this year were some of the worst floods in the country’s history. Turning quickly on its heels, the government has allocated $150 million from the Emergency Response Fund for the recovery and disaster resilience activities in 2022-23. The government has also provided $800,000 in funding for the Regional Small Business Support Program in 2023. The purpose of the funding is to assist flood-affected small businesses in southern Queensland and northern NSW.