Ten things small businesses need to know about the 2022 federal budget

The 2022 federal budget has arrived, showing a government pitting its preferences for economic ‘repair’ against the benefits of targeted fiscal support.

With an election on the way, the Morrison government has a little to crow about: topline figures show next year’s budget deficit is slated to be $78 billion, a significant improvement on December’s estimates.

But with inflation surging, and skills shortages still constraining local businesses, today’s budget aims to placate businesses concerned about rising costs and a lack of qualified labour.

Here are ten key takeaways for Australia’s small business community.

1. The federal government has pledged $2.8 billion to boost apprenticeship uptake and employee retention in the face of skills shortages. The cornerstone of that promise: a new Australian Apprenticeships Incentive System, which will provide wage subsidies to businesses which take on trainees in “priority” fields. That’s good news for SMEs dreading the end of the (recently extended) Boosting Apprenticeships Commencements scheme, and the subsidies it provides.
2. Small businesses looking to build their digital firepower can claim “bonus” tax deductions on eligible expenses. From 7.30pm tonight, firms can claim a further 20% on assets like laptops or servers, up to a total of $100,000 expenditure. Similarly, a further 20% deduction is available on external training courses to upskill employees in forward-looking fields like cloud computing, cyber security, and web design.
3. The ‘patent box’ scheme will expand to cover developments in agriculture and low emission technologies. The scheme originally permitted income derived from Australian-born medical and biotech patents to be taxed at a concessional rate of 17%; applying the same tax rate to climate-focused tech is hoped to foster climate-focused innovation at home.
4. The low and middle income tax offset (LMITO) will grow in the 2021-2022 income year. A new $420 cost of living boost will see the so-called “lamington” provide workers with $1,500 in tax relief at tax time. However, there are no signs the offset will continue past this financial year.
5. Drivers, rejoice: the fuel excise on petrol and diesel will halve from March 30, from 44.2 cents per litre to 22.1 cents per litre. That halving will last six months – and the budget states the Australian Consumer and Competition Commission will make sure retailers pass the full discount to motorists.
6. As expected, proposed improvements to small business cashflow, built around changes to Pay-As-You-Go tax calculations, are included in the federal budget. The federal government has proposed a reduction of the GDP “uplift” rate from 10% to 2%, a move it claims will improve the cashflow of around 2.3 million taxpaying businesses.
7. The paid parental leave scheme will become “fairer” under the federal budget, even if the total number of weeks’ leave isn’t growing. In short: 18 weeks’ paid leave, plus two weeks of ‘dad and partner pay’, will become 20 weeks of paid leave, fully sharable between eligible parents. Despite calls from industry groups, superannuation contributions will not apply to parental leave, either.
8. Despite calls from some corners to make it permanent, there’s no indication the instant asset write-off scheme will linger past the end of the 2022-2023 financial year.
9. Disaster funding is on the way for flood-affected communities in NSW and Queensland. Some $150 million from the Emergency Response Fund will flow towards recovery and disaster resilience activities through 2022-2023, budget papers say. Elsewhere, $800,000 in funding will bolster the Regional Small Business Support Program in 2023, assisting flood-impacted small businesses in northern NSW and southern Queensland.
10. $56.2 million in funding will go towards programs assisting women take on positions in the technology and manufacturing industries. Extra programs mentioned in the budget aim to provide more women with entrepreneurial skills.