While the main focus of the Federal Government's 2022 Budget is short-term relief to household cost of living challenges, it also contains some incentives and assistance for Australian businesses, including provisions for digital adaptation, skilled trades training, education and manufacturing and boosting employment and regional economies, as well as some measures to address climate change and defence.

Key features of the 2022 Federal Budget for businesses

Small business support

The Budget allocates $5.5 million for establishing a dedicated small business unit in the Fair Work Commission, as well as $1.85 billion worth of cash relief of approximately $800 each for small and micro businesses under duress.

Additional support will be available in the form of $4.6 million to extend Beyond Blue's NewAccess for Small Businesses Owners program and $2.1 million for Financial Counselling Australia's Small Business Debt Helpline. Also included to foster business skills $8 million to the Australian Small Business and Family Enterprise Ombudsman to work with service providers offering expertise in business planning, capacity building and financial literacy.

Small business digital adaptation

An estimated 3.6 Australian businesses with an annual turnover of less than $50 million stand to benefit from a 20% tax reduction on expenditure on expenses and depreciation on assets that support digital adaptation, including cyber security costs. That means that eligible businesses will be able to deduct $120 for every $100 they spend on these types of purchases from the date of the 2022 Budget up to 30 June 2023.

The Budget allows for up to $1 billion in tax breaks for digital spending including upgrades to cyber security or investment in online sales platforms, websites, cloud computing, inventory management and tracking or portable sales devices.

Gallagher has highlighted the need for all businesses to increase cyber security measures for some time, and this improved tax deduction incentive is a positive move to help support the growing costs of adopting the defences underwriters want to see before providing cyber insurance cover.

Temporary fuel excise

A 50% cut to the rate of fuel excise from 44.2 cents per litre to 22.1 cents for 6 months, providing welcome relief to the transport sector and businesses operating commercial fleets.

Education

The $628.5 billion Budget includes a number of measures to address the labour shortage in skilled trades by allocating $3.7 billion to establish a new National Skills Agreement with the capacity to deliver an additional 800,000 training places.

It also allows for $1.3 billion over 5 years for a new Australian Apprenticeships Incentive System and other measures to support employers to engage and retain new apprentices.

At tertiary and research institute level the government is investing $988.2 million towards a university research reform package driving university-industry collaboration, workforce mobility and research translation and commercialisation.

Aged care

In addition to increased funding for COVID-related costs in the aged care sector (see below) in response to the Royal Commission on Aged Care Quality and Safety the government is committing $522 million to improvements.

Manufacturing

An injection of an extra $328.3 billion to the Modern Manufacturing Strategy includes $250.0 million earmarked for the integration and translation streams of the modern manufacturing to encourage local businesses and exporters towards greater efficiencies and competitiveness.

Regional

Regional areas have been hit both with the impacts of compromised supply chains and a surge in tree-change population growth. The new $2 billion 5-year New Regional Accelerator Program will fund regional businesses and communities to enable access to programs focused on local priorities such as infrastructure, manufacturing, training, research and education.

Expenditure on support to families, small business, local governments and local communities affected by the recent floods will exceed $6 billion.

Infrastructure

To future-proof the country the Budget allocates an additional $17.9 billion towards road, rail, and community infrastructure projects including specific projects such as

  • $2.3 billion for the North-South corridor in South Australia
  • $1.6 billion towards the Beerwah-Maroochydore rail extension in Queensland
  • $1.2 billion on the Beveridge interstate freight terminal in Victoria
  • $1.0 billion on the Sydney to Newcastle and Tuggerah to Wyong rail upgrade in NSW

In addition the Local Roads and Community Infrastructure program will be extended until 2025‒26 at a cost of $501.7 million and water infrastructure projects will receive a $6.9 billion dollar package including $5.4 million towards the construction of Hells Gate Dam on the Upper Burdekin River in North Queensland.

Communications will also receive and investment boost of $1.3 billion over six years to improve regional telecommunications and internet access, including $480 million to significantly upgrade NBN fixed wireless services in regional areas.

COVID-19 impacts reduction

The tourism and aviation sectors will receive assistance in recovering from the effects of COVID-19 border closures and lockdowns to the tune of $146.5 billion over 3 years and $543.5 million over 2 years respectively.

For employees of businesses wanting staff to pre-test via rapid antigen tests (RATs) COVID-19 testing to attend a workplace will be tax deductible and exempt from FBT.

The budget also allows for continued government focus on managing and minimising COVID-19 effects through procuring RATs, personal protective equipment (PPE), further COVID-19 vaccine rollouts and additional funding for health sector response including pathology.

The ongoing focus on COVID-19 management is no doubt positive news to businesses which have been adversely affected through ongoing lockdowns, restrictions, supply chain, COVID-19 risk management responsibilities and resource shortage impacts.

The information cited in this blog is sourced from government and media websites, and in no way reflects the opinions of Gallagher Australia.

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