SMALL BUSINESS SKILLS AND TRAINING BOOST
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 provided for a temporary skills and training boost for small businesses in the form of a bonus deduction. Small businesses (with an aggregated annual turnover of less than $50 million) can claim the bonus deduction as an additional 20% deduction, on top of their ordinary deduction, for expenditure incurred for the provision of eligible external training courses to employees by eligible registered training providers in Australia.
It applies to eligible expenditure incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2024. Special rules provide for the income year in which the bonus deduction can be claimed.
For more information on eligibility and if you can claim the small business boost, refer to Small business skills and training boost.
SMALL BUSINESS TECHNOLOGY INVESTMENT BOOST
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 provided for a temporary technology investment boost for small businesses in the form of a bonus deduction. Small businesses (with an aggregated annual turnover of less than $50 million) can claim the bonus deduction as an additional 20% deduction, on top of their ordinary deduction, for eligible expenditure incurred and depreciating assets acquired, for the purposes of their digital operations or digitising their operations. The maximum additional deduction is $20,000 per income year.
It applies to eligible expenditure of up to $100,000 per income year incurred from 7:30 pm (AEDT) on 29 March 2022 until 30 June 2023. Special rules also apply if claiming the bonus deduction for eligible expenditure on a depreciating asset.
For more information on eligibility and if you can claim the small business boost, see Small business technology investment boost.
FRANKED DISTRIBUTIONS FUNDED BY CAPITAL RAISING
This measure is not yet law. The Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 amended Income Tax Assessment Act 1997 to add distributions funded by capital raising to the list of distributions that are unfrankable.
A distribution by an entity is funded by capital raising if, broadly:
- the distribution is not consistent with an established practice of the entity of making distributions of that kind on a regular basis
- there has been an issue of equity interests in the entity or another entity, and
- it is reasonable to conclude in the circumstances that
- the principal effect of the issue of any of the equity interests was to directly or indirectly fund some or all of the distribution
- any entity that issued or facilitated the issue of any of the equity interests did so for a purpose (other than an incidental purpose) of funding the distribution or part of the distribution.
The amendments apply to distributions made on or after 15 September 2022.
OFF-MARKET SHARE BUY-BACK
This measure is not yet law. The Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 aligns the treatment for shareholders that participate in off-market share buy-backs undertaken by listed public companies with that currently applied to on-market share buy-backs. It also amends the income tax law in respect of selective share cancellations for shareholders to ensure alignment of tax treatment across capital management activities for listed public companies.
The result of this change is that no part of the purchase price in respect of an off-market share buy-back undertaken by a listed public company is taken to be a dividend. A distribution by a listed public company that is consideration for the cancellation of a membership interest in itself, as part of a selective reduction of capital, is unfrankable.
A company that undertakes an off-market buy-back or selective share cancellation after the measure takes effect may be required to debit the balance of its franking account.
The amendment applies to buy-backs undertaken by listed public companies that are first announced to the market after 7:30 pm, by legal time in the Australian Capital Territory, on 25 October 2022, and to selective cancellations undertaken by listed public companies that are first announced to the market on or after 16 February 2023.
DIGITAL GAMES TAX OFFSET
The Treasury Laws Amendment (2022 Measures No. 4) Bill 2022 introduced legislation to establish a Digital Games Tax Offset (DGTO).
The Digital Games Tax Offset is a refundable tax offset for eligible expenditure incurred in developing digital games in Australia. The amount of the offset is 30% of a company’s total ‘qualifying Australian development expenditure’ as determined by the Minister for the Arts.
To be an eligible recipient a company must be an Australian tax resident or a foreign tax resident with a permanent establishment in Australia. An offset can be claimed by a company when the company holds a completion, porting, or ongoing development certificate from the Minister for the Arts.
The maximum amount of the offset that can be claimed is $20 million in an income year. The maximum amount applies not only to a company but also extends to any other company that is connected with, or is an affiliate of, the company. The head company of a consolidated group claims the offset for the group for the relevant income year.
The offset applies to qualifying expenditure incurred from 1 July 2022.
OFFSHORE BANKING UNIT REGIME 2024
On 13 September 2021, the Amending Australia's Offshore Banking Unit (OBU) Regime became law. The government removed the concessional tax treatment for OBUs in respect of offshore banking activities, effective from the commencement of the OBU's 2023–2024 income year. Rules that deem an OBU to have only paid one-third of its foreign income tax on its offshore banking income will also no longer apply, meaning that its foreign income tax offset will be calculated using the ordinary rules.
The interest withholding tax exemption for OBUs will also be removed for interest paid on or after 1 January 2024.
COMMONWEALTH PENALTY UNIT INCREASE
The government increased the amount of the Commonwealth penalty unit from $222 to $275 from 1 January 2023. The increase applies to offences committed after the relevant legislative amendment has come into force on 1 January 2023. The penalty unit increase was announced in the 2022–2023 Budget.
The penalty unit amount will continue to be indexed every 3 years in line with the Consumer Price Index (CPI) as per the pre-existing schedule, with the next indexation occurring on 1 July 2023.
For more information see Penalties.