26th October, 2022
Beyond cost of living measures, tonight’s Federal Budget includes a number of announcements to which larger business operators will be paying close attention.
Tonight, the Federal Government announced its first Budget, delivering initiatives that would support the health and wellbeing of Australians without forcing inflationary pressures higher.
For larger or growing businesses, investments in infrastructure, boosts to manufacturing, reforming Australia’s energy supply and extending the ATO’s capabilities to address tax avoidance are all big ticket items not to be missed.
The Government has allocated an immediate $9.7 billion for infrastructure projects around Australia in the next four years, with a total of more than $120 billion of investment allocated to transport infrastructure over the next 10 years.
Current projects include (but aren’t restricted to):
The Government is also committing an additional $880 million to the “Roads of Strategic Importance” (or ROSI) initiatives and $500 million for the Local Roads and Community Infrastructure program, enabling local councils across Australia to deliver priority projects to quickly stimulate local economies.
As expected, the Government’s infrastructure announcements are much smaller in scale than those of recent years.
As well as being ‘lower’ in spend, the new Federal Budget for 2022-23 also includes $22 billion in “savings,” which will largely come from the abolishment of what the Government is calling “rorts and waste” projects – infrastructure projects from the previous budget that they deem to be without merit, or impossible to deliver.
For example, $9.3 billion has been cut from previously announced Coalition infrastructure investments including commuter carparks and the urban congestion fund.
Instead, those funds will be redirected to Victoria for the Suburban Rail Loop, $2.1 billion for projects in QLD, $1.4 billion for NSW projects, and smaller amounts for other states.
Significant investments in local manufacturing incentives were announced, with $135.5 million over the next four years to support manufacturing and upskill the manufacturing sector workforce. This includes:
For regional businesses, the Government has committed to modernising the electricity grid to help put downward pressure on power prices and support the transformation to a clean energy future by introducing 10,000 new transmission lines to the electricity grid. In addition, the $1.9 billion Powering the Regions Fund will help regional Australians access the economic opportunities of decarbonisation.
When it comes to digital connectivity, a much welcome incentive by regional businesses is the $2.4 billion allocation to extend NBN fibre access to 1.5 million more premises and a further $1.2 billion for the Better Connectivity for Regional and Rural Australia Plan.
In a survey conducted by MYOB, participants noted that unreliable internet is a barrier in the adoption of digital tools, with 28 percent saying challenges in accessing NBN, or a stable internet connection, prevent them from using digital tools.
The Government has set its sights on multinational corporations who have previously benefitted from lax laws and loopholes relating to their taxable income.
The Government is closing these loopholes to ensure multinationals pay their fair share of tax in Australia and are improving integrity through higher levels of tax compliance.
This includes a Multinational Tax Integrity package which is set to raise around $1 billion in revenue over the next four years, as well as an extension of compliance programs for tax avoidance, shadow economy and personal income tax which will raise a further $3.7 billion during the same time period.
In addition, the introduction of an anti-avoidance rule has been designed to prevent significant global entities with global revenue of at least $1 billion, from claiming tax deductions for payments made directly or indirectly to related parties in relation to intangibles held in low or no-tax jurisdictions.
To assist with transparency, the Government is introducing stricter digital reporting requirements for all relevant companies.
From next year, the Government will require:
For more Federal Budget coverage, click here.