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16th May, 2022

3 business planning tips for the financial year ahead

With end of financial year just around the corner, many business operators should now be looking ahead to FY22/23 and making hard-nosed plans according to available data and forecasting.

The ripple effects of lumpy supply chains, staff shortages, increased business costs and loss of revenue are still being felt in the wake of the COVID-19 pandemic.

A recent update from the Australian Bureau of Statistics notes that over half (57 percent) of all businesses are operating with increased business costs, with medium businesses more likely than large and small businesses to have increased costs (66 percent compared with 62 percent and 56 percent).

Perhaps positively, though, in April 2022, 16 percent of businesses reported that revenue had decreased over the last month, compared to almost a quarter (24 percent) of businesses experiencing a decrease in revenue in March 2022.

The end of the ‘response’ phase and the entry of the ‘recovery phase’ offers businesses a change in pace – with growth, new staff and an increase in output at the forefront of many business owners plans.

With this growth comes an increase in obligations – both to staff and to the tax office – here are three areas of focus for business owners to take into account as they plan for the future.


Become familiar with available incentives


The Australian small business sector received several mentions in the Federal Government’s 2022/23 budget, with some tax cuts and other support measures slated to come into effect from 1 July.

Below are some key funding extensions that have been granted for the following support services:

In addition, as part of the 22/23 Federal Budget, the Government flagged the creation of a Digital Tax Incentive, with the aim to boosting investment into online solutions and capabilities.

This means that from 29 March 2022 to 30 June 2024, small businesses (with aggregated annual turnover less than $50 million) will receive a 120 percent tax deduction for every $100 spent on external training courses and investment in digital technology such as ecommerce platforms or cybersecurity, up to $200,000 per year ($100,000 each for Training and Digital Investment). Some exclusions apply, such as in-house or on-the-job training.

NB: While the Government has flagged the introduction of this digital tax incentive, it did not manage to pass legislation on the matter prior to the beginning of the current election campaign. As such it’s worth noting that business owners should avoid changing their spending behaviour until the details of this measure have been enshrined in law.

READ: Strategic growth planning and how to get it right

While this is all good news, for cashflow purposes, it’s important to note that expenses incurred between 29 March and 30 June 2022 will need to wait until the 2023/24 financial year to be claimed.


Get payroll processes in shape


Most businesses should already be familiar with the STP (Single Touch Payroll) system, including Phase 2, which was rolled out in January 2022.

Designed to streamline the reporting of employee pay, tax withheld and superannuation to the ATO via accounting software such as MYOB, STP Phase 2 includes extra reporting requirements such as Lump Sum E payments, child support and TFNs.

The 2022/23 Federal Budget has not flagged any significant changes to the current STP system, however from 1 July businesses (with up to $50 million aggregated turnover) can calculate their future PAYG instalments based on their previous year’s payments plus a GDP uplift rate of two percent, reduced from 10 percent.

Also – starting from July 2024 – businesses will be able to calculate their PAYG instalments based on their current financial performance – a support measure that is intended to consider business cashflow.


Take upcoming super changes into account


There has been no change to the legislated increases to the Super Guarantee, due to increase from 10 percent to 10.5 percent from 1 July 2022, and by 0.5 percent per year from 1 July 2023 until it reaches 12 percent.

Employers need to be mindful that the additional 0.5 percent must be paid by them, and they cannot use an employee’s existing salary sacrifice contributions to reduce or offset that cost.

READ: 4 tips for getting super payments right in 2022

Without a doubt, 2022/2023 is going to be a significant financial year for all businesses. As we recover from the COVID-19 pandemic and global competition for customers on the rise once again, understanding your financial situation, planning and managing your taxation obligations are an integral part of any successful business roadmap.

Don’t wait until next year to get your tax planning sorted. With MYOB Business, managing accounts and processing taxes is fast, secure and more automated, so get good busy this EOFY.