Date posted: 06/04/2022 8 min read

Experts unpack the Budget – and recovery

An expert panel answered questions from CAs and discussed what Australia’s Budget means for members and their businesses.

In Brief

  • The 2022-23 Federal Budget gives CAs a lot to talk about with SME clients but there isn’t much in it for larger businesses.
  • CA ANZ Australian Tax Leader Michael Croker CA says it’s important CAs get clarity on what training qualifies for the 120% deduction for business skills training.
  • CA ANZ welcomes the 120% tax deduction for small businesses to digitise and says CAs have an enormous role to play in this.

By Christopher Niesche

Australia’s 2022 Federal Budget gives advisers a lot to talk about with their small and medium business clients, but there isn’t much in it for larger businesses, a Chartered Accountants Australia New Zealand post-Budget briefing was told on 30 March.

More than 3000 members attended CA ANZ’s online event, which was opened by CA ANZ President Kate Boorer FCA and moderated by Susan Franks, CA ANZ’s senior tax advocate.

Paul Kelly, political commentator and editor-at-large for The Australian newspaper, shared his views on the politics of the Budget, saying Treasurer Josh Frydenberg got the balance between the economics and the politics better than many people expected.

Paul KellyPicture: Paul Kelly.

A Budget framed in the political centre

“This is a Budget framed in the political and economic centre ground. It won’t reverse the government’s 54-46 polling deficit, but it gives the government a fighting chance to put the economy front and centre of the election campaign,” he told the audience.

“At best, it could make the government competitive.”

Kelly noted that in the five years from 2021, the Budget forecasts extra revenue of A$142 billion, with A$39 billion going in tax and spending decisions and A$103 billion going to the bottom line. In the 2022-23 financial year, total extra government revenue is A$38 billion, with nearly half going on taxes and other relief, and the rest going to the bottom line.

“There are two views on this trade-off. Many economists will correctly object, with a strong economic recovery, robust consumer spending, rising inflation and high Budget deficits,” Kelly said. “But the political realist in me says that with the government facing an election in less than two months, and trailing in the polls, it was untenable to think Frydenberg and Scott Morrison would not bring down significant cost of living assistance.”

Federal Budget 2022 sharing knowledge eventPicture: Sharing Knowledge Federal Budget Event.

What CAs can focus on for SME clients

Michael Croker CA, CA ANZ’s tax leader in Australia, said the Budget provides a “whole host” of things for advisers to talk to clients about.

For accountants who do personal tax work, the one-off boost to the low-and-middle income tax offset (A$420 for this tax year) will see lots of clients knocking on the door come July, eager to get their tax returns done early.

“I know that puts a lot of practitioners under stress. We will work with the ATO to see if that can be managed,” he said.

Croker said it’s also important for CAs to be clear on who can provide training that qualifies for the 120% deduction for skills training. He added that CA ANZ will be keen to have its own training programs included.

There is also a 120% tax deduction for small businesses to digitise. This could apply to money spent on cloud computing, software, e-invoicing, cybersecurity and portable payment devices.

CAs have an enormous role to play in this and CA ANZ will be advocating for this deduction to cover the cost of CAs introducing and educating their clients about the benefits of technology-based business solutions.

“This is about educating our clients, not just about getting a 120% deduction for technology spend, but for embracing the business benefits of smarter data, better management reporting, better engagement with your chartered accountant in public practice to do what we do best, which is to help our clients grow their business,” Croker said.

Michael CrokerPicture: Michael Croker CA.

“This is about educating our clients, not just about getting a 120% deduction for technology spend, but for embracing the business benefits of smarter data, better management reporting, better engagement with your chartered accountant in public.”
Michael Croker CA

“Many accountants want to morph into more valuable premium work on business advisory and to get this technology to help with compliance working well behind the scenes.”

The Australian Taxation Office (ATO) is also receiving more money to undertake audits of multinationals, large companies and high net wealth individuals – a move aimed at increasing the tax take.

Accountants will also be interested by an indication from Labor’s shadow assistant treasurer, Stephen Jones, at a post-Budget breakfast that Labor has ditched its previous policy of placing a A$3000 cap on the deductibility of tax agent fees, Croker said.

Federal Budget 2022 sharing knowledge eventPicture: Sharing Knowledge Federal Budget Event.

What’s really worrying business

There wasn’t much in the Budget for big business, said Diana Youssef CA, head of tax at ASX-listed Bega Cheese.

“I don’t think that businesses expected a lot out of the Budget. This is more a business-as-usual type of Budget,” she said.

Youssef said the major issue facing businesses in Australia is ongoing labour shortages.

“The labour shortages put a strain on businesses, particularly when we’re dealing with a level of absenteeism due to COVID-19, which potentially could increase as well as we head into winter.”

Diana YoussefPicture: Diana Youssef CA.

Not that much in the Budget on superannuation

On superannuation, the government announced it will extend provisions allowing retirees to take just half the required superannuation out of their pension accounts for at least another financial year in the wake of the global investment market turmoil caused by the COVID-19 pandemic.

“I think the government felt their hands were tied given the interest rates are still historically low, especially on deposits. And it looks like that may continue for some time to come,” said Tony Negline CA, CA ANZ’s senior leader in superannuation and financial advice.

Negline said CA ANZ would have liked the government to have addressed several superannuation issues, including changing annual superannuation contribution caps to lifetime caps, which would make it easier for people to catch up later in life and make the system fairer for women.

CA ANZ would also like consideration of changes to the non-arm’s length income (NALI) regime in relation to super funds, with the government’s current reform proposal potentially going to cost super funds up to A$70 billion each year.

“We need this law to be amended,” Negline said. “We need to start working with Treasury. And if we can get bipartisan agreement, then we can continue to work behind the scenes with the Treasury during the closing of Parliament for the election period.”

Tony NeglinePicture: Tony Negline CA.

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