Two Federal Budgets in one year! Last night Labor handed down its first Federal Budget since the election earlier this year. As a team we order pizza, press the refresh button on the budget website madly as 7.30pm hits and then power through reading all of the budget papers and commentary. We normally have a hundred pages of notes as a team on all the things small businesses need to know. Last night…we struggled to find reference to small businesses or startups in the budget papers at all.
Nonetheless Alan and Steph sat down this morning to talk through the few things that are applicable for businesses.
the economy
We are currently experiencing the highest rate of inflation in 40 years which can be seen by higher fuel prices, energy costs as well as fruit and vegetables. Inflation is expected to peak at 8% by December.
Interest rates have also risen sharply and are expected to peak at 3.1% (+3% over the year) by the end of the year and remain higher over the next year.
National debt is projected to be $572b by the end of the year and expected to climb to $766b in 2026.
for small businesses
Electric Vehicles
From 1 July 2022, battery, hydrogen fuel cell and plug-in hybrid electric cars will be exempt from fringe benefits tax and import tariffs if the car has a first retail price below the luxury car tax threshold for fuel-efficient cars ($84,916 for this Financial Year). The car must not have been held or used before 1 July 2022.
Worth mentioning here is the fact that whilst there is no FBT payable, if this is provided to an employee the normal Reportable FBT rules still apply, meaning the amount needs to be included in employees tax returns and will therefore impact things like income for Family Benefits calculations, Medicare levy surcharge & Div 293 tax.
This is already before parliament so wasn’t new news in the budget.
Supporting Small Business Owners
$15.1 million is earmarked over 2 calendar years from 1 January 2023 for the Small Business Debt Helpline and NewAccess Program to help support the financial and mental wellbeing of small business owners. This program partners small business owners with trained mental health professionals and provides up to 6 structured sessions.
Small Business Energy Efficiency Investment
$62.6 million is earmarked to help support small and medium-sized businesses to improve their energy efficiency and reduce energy use. This will be delivered in the form of grants to empower investment in energy efficient upgrades. There wasn’t a lot of detail in the budget papers on this so watch this space.
Focus on Energy Jobs
A New Energy Skills program will support development of fit for purpose training pathways for clean energy industry jobs.
A New Energy apprenticeships program will deliver 10,000 new energy apprentices. The apprentices will be able to claim a support payment of $10K over the duration of their apprenticeship. Includes $2k on commencement, $2k per year for up to three years and $2k on completion. This is for the Apprentice, with employers still receiving the normal rebates as well.
Jobs
There has been significant press around how hard it is to find workers in Australia at the moment. To help combat this, the migration cap is being lifted to 195,000 to help alleviate the skills shortage. 480,000 fee-free TAFE places will be provided by the government. The States and Territories have committed to develop a $1 billion one-year National Skills Agreement. That is 180,000 fee-free TAFE places during 2023 with 15,000 of these dedicated to aged care to help in this sector.
spending in general
National Reconstruction Fund
$15 billion has been allocated to partner with the private sector to support investments that grow the economy and increase employment, specifically focused in regional areas. Targets here are resources, agri, transport, medical science, renewables & low emission technologies and defence. It’s important to note that the previously announced Modern Manufacturing Initiative and funding for 3rd round of Manufacturing Modernisation Fund have been scrapped. The spending isn’t likely to flow until the fund has actually been established in 2 years time.
Trade & Tourism
$171.6 million over 4 years has been earmarked to support trade and tourism in Australia.
- $48 million over 4 years to support recruitment & marketing in tourism and travel as well as infrastructure upgrades for caravan parks. We all know Aussies love a good camplify holiday
- $100 million for participation in the World Expo
- $19.6 million to implement the Singapore-Australia Green Economy Agreement
- $4 million to support Australia's trade diversification
Housing
The Government has a target to build 1 million homes in 5 years commencing from 2024. That’s broken up into :
- $350 million over 5 years for 10,000 affordable homes, this will be matched by state and territory governments
- $324.6 million to the Help to Buy scheme which is the equity contribution from government for low income earners
- $10 billion in Housing Australia Future Fund
There are already shortages of material and tradespeople everywhere, so to achieve these targets will certainly keep the building trades even busier.
Other
$12.6 million to combat scams and online fraud
$8.8 billion increase in NDIS funding over the next 4 years
$2.4 billion investment in NBN
$50.5 million to establish the Australian Critical Minerals Research & Development Hub
In a bid to get to net zero by 2030, the government is spending $42.6m to restore the Climate Change Authority. Climate change spending will now be transparent in future budgets. We look forward to more detail around the ‘how’ of achieving these targets.
for smsf and super
Helping older Australians downsize
The government wants to encourage more ‘older australians’ to downsize in the hope this provides more housing for younger families. If you sell your home and you are eligible for the age pension, the proceeds from the sale of your home won't be included in your pension assets test for 24 months. This was previously only 12 months.
In more exciting news, although not announced in the budget as this is already making its way through parliament, downsizer contributions eligibility is now available for people aged 55+ whereas it was previously 60. To recap you can contribute $300k (each) from the proceeds of the sale of your own home into super.
The only other thing really mentioned in the SMSF space was the reversal of a proposal to have your SMSF Audited on a three year cycle not a one year cycle.
If you are of age pension age and still working, the government will fund up to $4,000 in worker credits, effectively allowing you to earn up to $11,800 before any of your age pension is cut. This is aimed at allowing pensions who want to work more the ability to do so without it affecting your pension.
for individuals
Paid Parental Leave
Is set for some new reforms increasing from the 18 weeks for primary carers and 2 weeks for non-primary carers to 26 weeks in total. This isn’t happening overnight. Start date for the increase will be July 2024 where an additional two weeks will be available. This will increase by two weeks again in July 2025 and then again by two weeks to the total 26 weeks in July 2026.
The leave will be available to both parents, and can be claimed at the same time. This also includes building in some flexibility to allow the 26 weeks to be taken when suits the parents, i.e. one parent can take 2 days per week and the other 3 days per week, as long as the combination only adds to a total of 26 weeks.
Under the current measures, a mother must claim PPL then transfer it to another parent if a family wants to share parental leave.
Cheaper Childcare
From July 2023, Child Care Subsidy rates will go from 85% to 90% for families earning less than $80,000. This rate will then reduce by 1% for each $5,000 in income that a Family earns making the cut off point $530,000
Families with combined income of $200,000 currently have a subsidy rate of 50% whereas under the new changes this would increase to 70%.
What next
As usual anything announced still needs to be legislated, although there really isn’t a lot in here at all from a business perspective. We will keep you updated via Ninja News as more details in the spending announcements come to light.
Don’t forget Friday Drinks this week. RSVP here Any questions you have in relation to the budget feel free to shoot these through to one of the team or post up on our socials. We will keep the answers coming on Facebook, Instagram and in Ninja News.