20% Additional Deduction for Skills Training and Digital Adoption
Businesses with a turnover of less than $50 million stand to receive a 20% uplift in deductions (on what they would normally be entitled to) for eligible expenditure on external training courses and digital technology. This 20% boost applies to expenditure incurred from the time of last night’s Budget until 30 June 2023 for digital adoption, and until 30 June 2024 for skills training. Some exclusions apply.
Apprentice Wage Subsidies Extended
The Boosting Apprenticeship Commencement (BAC) and Completing Apprenticeship Commencements (CAC) wage subsidies will be extended by three months to 30 June 2022. Additionally, funding has been set aside over five years to introduce a new Australian Apprenticeships Incentive System from 1 July 2022 to support employers and apprentices in ‘priority occupations’.
This is welcome news for employers and apprentices alike.
Reduction in GDP Uplift Factor for PAYG and GST Instalments for 2022/23
This will be pegged at 2% for 2022/23. This is significantly lower than the 10% that would otherwise have applied under the statutory formula. It will apply to small to medium enterprises eligible to use the relevant installment methods (up to $10 million annual aggregated turnover for GST installments, and $50 million annual aggregated turnover for PAYG installments).
For background, each year the ATO adjusts GST and PAYG instalment amounts your business may be required to pay using a formula known as the gross domestic product (GDP) adjustment. This is based on data published by the Australian Bureau of Statistics.
This measure may provide real cash flow relief for eligible businesses in the coming financial year.
PAYG installments: Option to Base on Current Financial Performance
Companies will be permitted to opt to have their PAYG installments calculated based on current financial performance (as opposed to past year/past period performance) extracted from business accounting software.
While this measure is welcome, reflecting real time business performance, it is anticipated that this will not come on stream until 1 January 2024.
Employee Share Schemes for Unlisted Companies – Thresholds Amended
The investment thresholds for unlisted companies in respect to employee share schemes (ESS) will be changed. Where employers make larger offers in connection with ESS in unlisted companies, participants will be able to invest up to:
$30,000 per participant per year, accruable for unexercised options for up to five years, plus 70% of dividends and cash bonuses, or
Any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.
The regulatory requirements for offers to independent contractors will also be removed where they do not have to pay for interests. No date of commencement was announced.
ESS are becoming increasingly popular as a way to incentivise employees by (at least in part) tying their remuneration to the performance of the business.