Making COVID-19 Business Grants Non-Assessable Non-Exempt Income.
The Government has extended the measures that enable payments from certain state and territory COVID-19 business support programs to be made non-assessable non-exempt income (‘NANE’) for income tax purpose. This applies to the following South Australian Grants.
- South Australia COVID-19 Tourism and Hospitality Support Grant.
- South Australia COVID-19 Business Hardship Grant.
Technology Investment Boost
Small businesses can claim 120 per cent of their expenditure on digital technology, including portable payment devices, cyber-security systems and cloud subscription services, up to an annual cap of $100,000.
The government said 3.6 million businesses with a turnover below $50 million will be eligible.
Total tax relief: $1 billion
Example: Spend $10,000 and get a deduction of $12,000, using the company tax rate of 26%, the tax benefit of a $10,000 expenditure is $2,600, whereas, the tax benefit of the increased deduction is $3,120. Therefore the benefit is $520 in tax savings.
This example is even greater at higher individual tax rates.
Beware : The fate of the incentives hangs on the government returning and/or Labor support. Our recommendation is that expenditure that is not essential is deferred until legislation is passed.
Skills and Training Boost
Small businesses can claim 120 per cent of their expenditure on external training for employees. Training must take place online or in Australia, by entities registered in Australia. There are some exclusions, including in-house and on-the-job training.
To be eligible, the business must have a turnover less than $50 million.
Total tax relief: $550 million
Starts: Immediately and runs until 30 June 2024. Expenditure before June 30 2022 has to be claimed in subsequent tax years.
Note: above example would apply to eligible training expenditure.
Beware :the fate of the incentives hangs on the government returning and/or Labor support. Our recommendation is that expenditure that is not essential is deferred until legislation is passed.
Change to PAYG Uplift Rate
In 2022‑23, the PAYG income tax and GST instalments will be increased by 2 per cent, instead of 10 per cent for the income year.
The government said the measure, already announced, will mean $1.85 billion in cash-flow support for 2.3 million small to medium businesses, sole traders and others who use the instalment method.
