Posted March 30, 2022
It’s federal budget season, and the nation’s small businesses are wondering whether there’s any good news on the horizon for what is shaping up to be (yet another) challenging year.
Many business operators and workers alike are hoping this year’s federal budget will provide a lifeline to small businesses that have struggled to keep their head above water during the pandemic, despite Treasurer Josh Frydenberg signalling an end to COVID-era government spending. While the budget is normally delivered in early May, the 2022 budget has taken place earlier than usual due to the timing of the federal election, which will likely occur in mid-May.
So, what’s in it for salon owners in Budget 2022? HABA have dug through the detail to draw out the key insights from this years Budget.
Frydenberg claimed his government has helped small businesses more than any government in history, with the lowest tax rates in 50 years. “Small and family businesses are at the heart of our economy and local communities,” he said. “Lower taxes for small business is part of our plan for a stronger future.”
The Government will deliver around $2.6 billion in tax cuts in 2022‑23. This includes reducing the company tax rate for small businesses from 30 per cent in 2013-14 to 25 per cent from 1 July 2021.
From 1 July this year, over 10 million individuals will receive a one-off $420 cost of living tax offset. Combined with the low and middle income tax offset (LMITO), eligible low- and middle-income earners will receive up to $1,500 for a single income household, or up to $3,000 for a dual income household. This builds on the estimated $40 billion in tax relief under the Personal Income Tax Plan and will “help individuals meet rising cost of living pressures”. As a result of the Personal Income Tax Plan, an individual earning $90,000 each year, around the average full-time income, will benefit by a total reduction in tax of $8,655 from 2018‑19 to 2022‑23, with permanent tax cuts of up to $2,565 on offer.
PAYG instalments include an adjustment for GDP, which will be reduced from 10% to just 2% for the 2022-23 income year, freeing up cash for businesses. This measure will also apply to individuals with investment income.
The Government will reduce fuel excise by 50 per cent for 6 months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre. Fuel subject to a lower excise rate is expected to flow through to the majority of service stations and Australian consumers within a few weeks as stations replenish their stocks. This is relevant for all Australians, and particularly those salon owners with multiple locations or a long commute from their place of residence to their place of work.
In this Budget, the Government has invested a further $2.8 billion to support Australian apprenticeships, introducing a new streamlined Australian Apprenticeships Incentive System, which will provide support to employers and apprentices.
There have been over 70 changes made to migration and visa settings in response to COVID‑19 and to assist with economic recovery. These include specific visa validity extensions, removal of work restrictions and visa application charge waivers or refunds. This will allow greater skilled migration, a significant benefit for salon owners crying out for staff in the hair and beauty industry.
Salon owners that spend on new technologies and training courses to upskill staff will be able to claim 120% of the costs as deductions. For the estimated 3.6 million businesses with an annual turnover of less than $50m, eligible costs incurred from Tuesday evening can be deducted from their taxable revenue at an amount greater than what was actually spent. The Skills and Training Boost will also cover spending incurred by eligible businesses from Tuesday, and will last until 30 June 2024.
There is no limit on how much spending on training courses can be deducted by a small business at the bonus rate of 120%, but certain rules apply, such as that the course must be run by an external education provider (which could include your stockists or suppliers, or even private providers), and that provider must be registered in Australia.
In-house and on-the-job training is not eligible, nor is money spent training people who are not employees of the business. The courses can be provided in person (only in Australia) or online.
The 2022 Budget has invested a total $547 million into mental health services, including regional initiatives, enhanced services for young Australians through Headspace and improved access to affordable and multidisciplinary support from a range of service providers. Specifically, the Morrison Government is investing $4.6m over two years for free Beyond Blue mental health support for small business owners.
The Fair Work Commission will also be given $5.6m over four years to establish a dedicated unit for dealing with unfair dismissals and industrial protection disputes for small businesses. As the only industry association registered with the FWC, HABA will be able to continue to represent the best interests of salon owners at this peak industrial relations body. The Government is also providing $8 million to the Australian Small Business and Family Enterprise Ombudsman to work with service providers to offer business planning, capacity building and financial literacy.
The newly-announced Technology Investment Boost allows businesses to claim a bonus 20% deduction for the cost of expenses and depreciating assets, such as portable payment devices, cybersecurity systems and subscriptions to cloud-based services.
“From tonight, every hundred dollars these small businesses spend on digital technologies like cloud computing, e-invoicing, cybersecurity and web design will see them get a $120 tax deduction,” Frydenberg said.
For salon owners, this could include salon software, new websites or new digital security measures for your salon. An annual cap of $100,000 will apply to eligible technology expenditure, with the initiative set to last until 30 June 2023.
Small and medium business owners were clear in the lead up to this year’s budget about the sorts of support they’re hoping to see from the government, with a recent survey from MYOB revealing that any simplifying or reducing of business taxes, and the creation of more assistance packages for businesses impacted by COVID, will gain favour among small business owners. The survey of over 1,000 small and medium business owners and decision makers posed a range of policy-based questions and showed 63% of respondents would vote for policies that significantly simplify the reporting of GST or BAS. Of those surveyed, 63% are also in favour of reducing the company tax rate from 27.5 to 25%, and 61% would vote for assistance packages for COVID-impacted businesses. However, nothing like this was handed down by Mr Frydenburg on Tuesday night.
Because this is an election year, we need to be aware that the budget has been positioned to swing voters. Should the Australian Labor Party win the next federal election they have stated that they would release their own budget in December, if not sooner.
What salon owners can take from Budget 2022 is that there are several targeted schemes that provide significant benefits to small business owners but will only be operating for a short window. Take advantage of as many of them as you can during this period, as we know that these schemes are completely up for change if there is a change in federal government, or by Budget 2023. While times have been though this may be the time to sit with your accountant or bookkeeper to determine the best ways to take advantage of these changes, be it invest in a new computer and booking software or upskill yourself or staff.
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