Are you across the latest changes in business tax? There are several business tax measures and incentives in place which your company may be able to take advantage of or may need to factor in. It’s important to be across these measures in order to be compliant and to minimise your business tax for your 2023 tax return. Here’s what you need to know.
Small business technology investment boost
The Small business technology investment boost supports small businesses to invest in digitising their operations.
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 has put in place a temporary technology investment related deduction for small businesses.
Small businesses with a total annual turnover of less than $50 million can claim the boost as an additional 20% deduction on business expenditure on digital operations. This includes expenditure on depreciating assets first used or installed before 30 June 2023. The maximum additional deduction is $20,000 per income year.
The incentive applies to eligible spending of up to $100,000 per income year from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2023.
Small Business Skills and Training Boost
The Small Business Skills and Training Boost is an incentive designed to help small businesses invest in training for their staff.
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 has put in place a temporary skills and training related deduction for small businesses.
Small businesses with a total annual turnover of less than $50 million can claim the incentive as an additional 20% deduction on external training. The boost only applies to specific training for employees through certain registered training providers in Australia.
The investment must have been made between 7:30 pm (AEDT) 29 March 2022 until 30 June 2024.
Off-Market Share Buy-Back
The Off-Market Share Buy-Back measure is designed to create consistency for how off-market share buy-backs are treated for listed companies for franking credit purposes, bringing this in line with how the process works for on-market share buy-backs. An off-market buy-back occurs outside the typical course of trading.
This measure is not yet law. The Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 proposes to align the treatment of shareholders that participate in off-market share buy-backs to fit with the process for on-market share buy-backs. It will also amend the income tax law in respect of selective share cancellations.
The changes will have capital gains tax (CGT) implications.
The amendment will apply to buy-backs undertaken by listed companies announced to the market after 7:30pm (AEDT) 25 October 2022 and certain cancellations on or after 16 February 2023.
Franked Distributions Funded by Capital Raising
The Franked Distributions Funded by Capital Raising initiative is designed to prevent a company from attaching franking credits to distributions to shareholders outside of the company’s normal dividend cycle, if they are funded by capital raising activities that result in new equity interests.
This measure is not yet law. The Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 proposes to amend the Income Tax Assessment Act 1997 to add distributions funded by capital raising to the list of distributions that are unfrankable.
A distribution is considered to be funded by capital raising if it falls outside of the typical dividend cycle, if there has been an issue of equity interests, if the key impact and/or intention behind the issue of equity interests was to wholly or partly fund the distribution.
Should the Bill be enshrined in law, the amendments will apply to distributions made on or after 15 September 2022.
Digital Games Tax Offset
The Digital Games Tax Offset is a tax offset for eligible spending on developing digital games in Australia. The offset is 30% of a company’s total ‘qualifying Australian development expenditure’.
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 has put in place the digital games tax offset (DGTO).
The recipient must be a company which is an Australian tax resident or a foreign tax resident with a permanent establishment in Australia. The company must hold a completion, porting, or ongoing development certificate from the Minister for the Arts.
The maximum amount of the offset is $20 million per income year. The offset applies to eligible spending from 1 July 2022.
Commonwealth Penalty Unit Increase
The Commonwealth penalty unit amount increased from $275 to $313 on 1 July 2023. The increase applies to offences committed on or after 1 July 2023.
The penalty unit increase was announced in the 2022–23 Budget and is in line with increases in the Consumer Price Index (CPI).
Your accountant should be knowledgeable about these business tax changes and help you navigate them effectively.
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The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.