LUNA’s FY22 Federal Budget Summary
The FY22 Federal Budget’s out, and everyone’s (but, naturally) pinning themselves somewhere along the winners-losers spectrum.
If you’re wondering how this affects players in the startup ecosystem, you’re in the right place – our CFO and Head of Accounting, Daniel Ross, along with our Head of Legal, Emma Ferguson, have outline the need-to-knows for you below.
Our Favourite Announcements
Small Biz Tech Investment Boost
At a glance: Small businesses (with a turnover of less than $50m) that spend on tech and digital adoption can claim an extra 20% tax deduction on this spend (capped at $100k per year)
LUNA view: Yay!
This is a great incentive for startups to bring forward tech spend and maybe even spend a little more than they otherwise would have. Big winners here are startups that are already profitable, as spending more on tech now will result in them paying less tax straight away. The boost is less sweet for startups that aren’t profitable – you’ll still get the benefit but you won’t really realise it till you’re profitable.
Small Biz Skills & Training Boost
At a glance: Small businesses (with a turnover of less than $50m) that spend on team education can claim an extra 20% tax deduction on this spend (uncapped).
LUNA view: Yay!
This is a great incentive for startups to bring forward tech spend and maybe even spend a little more than they otherwise would have. Big winners here are startups that are already profitable, as spending more on team education now will result in them paying less tax straight away. The boost is less sweet for startups that aren’t profitable – you’ll still get the benefit but you won’t really realise it till you’re profitable.
Patent Box Scheme
At a glance: If you receive revenue from certain eligible patents, this income will be taxed at a lower rate of 17% (compared with 25% or 30% for other income)
LUNA view: Yay!
This is a great incentive for startups that own patents that they derive revenue from. Big winners here are startups that are already profitable as you’ll see the benefit of the reduced tax rate immediately. If you’re not profitable yet, you’ll need to wait till you are in order to realise this benefit.
Employee Share Scheme
At a glance: There’s been no real updates on this front as we still wait for the Government to deliver on its promised “revamp” of the ESS regime. In December 2021, the Federal Government released draft legislation that (if enacted) will help to reduce the red tape for companies when issuing ESS interests (e.g. shares and options) to their employees and the disclosure they need to make. The main change in the draft legislation is the proposed increase of the value cap from $5k per participant per year to a monetary cap of $30k per participant per year.
LUNA view: Nay :(
Sadly, we don’t seem to have any further details around when this draft legislation will come into effect. The proposed changes will provide greater flexibility for startups looking to incentivise their teams, but until the legislation comes into force there is no tangible impact. If you still have questions around this bit, get in touch with Emma.
So, which startups won the budget?
Profitable startups that can take advantage of the incentive boosts and patent box scheme and see immediate benefits!
Startups selling tech services and education experiences, who technically just became more affordable for their clients!
Interested in chatting to our Labs team about education experiences for your team? Get in touch here.
Still got questions about the budget and how it might affect you and your startup? Book a chat.
*Reminder that this article is not formal advice and is of a general nature only. You should speak to someone from our team to get advice tailored to your circumstances before acting on anything covered above.
