SME tax incentives pass both houses
A raft of tax measures have now passed Parliament, including incentives to support the upskilling of employees in SMEs.
Yesterday, the Senate passed Treasury Laws Amendment (2022 Measures No. 4) Bill 2022, containing a range of measures including the technology investment boost and the skills and training boost measures for small and medium businesses.
Small and medium businesses with an annual turnover of less than $50 million will now have access to a bonus 20 per cent deduction for eligible expenditure on external training of employees by providers registered in Australia until 30 June 2024.
SMEs will also have access to a bonus 20 per cent deduction that will support the uptake of digital technologies, until 30 June 2023.
The two measures have been backdated to 29 March.
By backdating the deductions, Treasurer Jim Chalmers said businesses can be rewarded for the investments they’ve been making and can take advantage of this extra support.
Dr Chalmers said the measures will make it easier for small business and medium businesses and help them recoup some of the costs of the investments they make in their employees and digital operations.
“When small businesses invest in digital technologies and upskilling staff, it boosts their productivity and drives economic growth,” said Dr Chalmers.
“That’s why we are making them law and backdating deductions so businesses are rewarded for the investments they’ve been making and can take advantage of this extra support.”
Assistant Treasurer and Minister for Financial Services Stephen Jones said the measures will help small businesses to remain competitive in a rapidly changing technological landscape and take advantage of new opportunities for growth.
“Millions of small businesses that have already invested in new technology this financial year will now to be eligible to make deductions this tax time. It’s great news at a time where small businesses most need cash flow support,” said Minister Jones.
RSM Australia previously stated that the short time limits and expenditure limits for the two measures were “disappointing”.
“Small businesses will also need to be mindful that only expenditure eligible for a deduction under another provision of the taxation law is eligible for the bonus deduction, this may then exclude expenditures such as entertainment associated with the training expenditure,” RSM Australia assistant manager Catherine Davidson said in an RSM article.
“It is also important to note that the bonus deduction is not available for the training of non-employee business owners such as sole traders, partners in a partnership, and independent contractors.”
Changes to record keeping for fringe benefits tax
The bill also includes a schedule aimed at reducing and simplifying the fringe benefit tax (FBT) record keeping requirements for employers.
Schedule 3 to the bill amends the FBTAA to reduce compliance costs for employers finalising their FBT returns. It empowers the Commissioner, where appropriate, to allow employers to rely on adequate alternative records holding all the prescribed information instead of seeking that information again by way of statutory evidentiary documents, such as prescribed employee declarations.
The EM stated that providing employers with an option to rely on existing or other alternative records, as determined by the Commissioner, without the need to prepare additional records such as employer declarations or obtain declarations from employees in the approved form will reduce and simplify the employer’s record keeping compliance burden.
Taxation treatment of digital currency
The bill also amends the ITAA 1997 to clarify that digital currencies including bitcoin, continue to be excluded from the income tax treatment of foreign currency.
This follows a decision by the Legislative Assembly of the Republic of El Salvador to recognise bitcoin as an unrestricted legal tender by legislative decree which took effect on 7 September 2021.
An unintended consequence of this was the potential that bitcoin may be a ‘foreign currency’ for the purposes of the ITAA 1997 due to its status as a legal tender in El Salvador.
The amendments to the ITAA 1997 and the GST Act are intended to maintain the status quo prior to the El Salvador decree and clarify that bitcoin and similar digital currencies continue not to be treated as foreign currency, even if they are adopted as a legal tender by a foreign jurisdiction.
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