The 2022 pre-election budget was filled with numerous promises of quick money to voters ahead of the May election.
But in terms of the tech sector’s budget wish list, the focus for digital transformation in Treasurer Josh Frydenberg’s fourth budget is entirely on small businesses with increased tax breaks for small businesses investing in digital skills training and technology.
For every $100 a small business spends on outside employee training, they can claim a $120 tax deduction.
“Starting tonight, for every hundred dollars these small businesses spend on digital technologies like cloud computing, e-invoicing, cybersecurity and web design, they will get a $120 tax deduction,” the treasurer said in his budget speech Tuesday night.
The $550 million Skills and Training Boost will apply to nearly 8 million Australian small business workers.
A similar tax deduction bonus applies to digital asset spending for small businesses with annual revenues of less than $50 million – about 3.4 million businesses.
The $1 billion Technology Investment Boost applies to up to $100,000 in expenses per year with a 120% deduction on operating expenses and depreciation on digital transformation assets.
There is also $954 million for the Australian Apprenticeships Incentive System, which gives employers up to $15,000 in wage subsidies to hire new apprentices.
The program applies to eligible expenses incurred from budget night through June 30, 2024.
Despite signaling the idea to reduce the complexity of Employee Share Schemes (ESS) ahead of Tuesday’s budget, there was little detail in the budget documents.
The plan is to reduce disclosure requirements for ESS in privately held companies, provided individuals do noto more than $30,000 per year to acquire a stake in the startup (to be accrued for unexercised options for up to 5 years); or there is noo limit on the amount paid, provided that the participant can immediately benefit from a planned sale or listing of a company. But the bigger bottleneck for startups seems to remain: ineligible employees for the Startup Concession and it is a privately held company that is still taxed on the stock or options before they are at a point of liquidity, such as an IPO, or can sell them on a secondary market.
The government will invest $9.9 billion in Australia’s intelligence and cyber capabilities over the next decade through the Australian Signals Directorate (ASD).
With the Resilience, Effects, Defense, Space, Intelligence, Cyber and Enablers (REDSPICE) package, the government’s foreign intelligence agency ASD will double in size and add 1,900 additional jobs.
They include things like data analysts, computer programmers, and software engineers.
The funding is intended to bolster the government’s cybersecurity and intelligence capabilities, as well as its commitment to Australia’s Five Eyes and AUKUS trilateral partners, while supporting a secure Indo-Pacific region.
In the field of science and technology, most of the funding was announced ahead of last night’s speech. The measures include:
- $1.3 billion for the space sector
- $505.2 million for an accelerator to help commercialize university research
- $150 million for the CSIRO’s VC arm, Main Sequence Ventures, to support startups
- $37.4 million over four years for CSIRO Research Translation Start, turning scientists into entrepreneurs
Atlassian co-founder and renewable energy advocate and investor Mike Cannon-Brookes will likely be unimpressed to see the government extend its support to investment agencies the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy (ARENA), which sustainable or low-emission projects.
The estimates of the budget documents, which run over four years, show a 35% decrease in funding. Funding is down from $2 billion this fiscal year to $1.3 billion in FY26.
Expansion of patent box
The government’s previously announced patent box scheme for biotech and medtech companies, which offers favorable tax treatment to companies to commercialize patents in Australia, will be expanded to include agtech and low-emission technology.
Under the scheme, the effective income tax rate of 17% applies to eligible patents, rather than the 25-30% tax rates for small to large businesses. It applies to patents issued by IP Australia and extends to patents issued in the US and Europe
The program has yet to be approved by parliament and the government said it will consult with the agricultural and emissions reduction sectors when designing their implementation of the scheme.
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- 1 Employee share plans
- 2 Cybersecurity
- 3 scientific support
- 4 Renewable energy
- 5 Expansion of patent box