Federal Budget 2022 – October Edition

By Paul Meissner,

Here is the Budget recap no one will write….

Budget night has a long history in my house with some of my earliest memories were of my Accountant father dissecting the budget.

Pouring over Budget papers no.2 every budget night is a guilty pleasure and it’s fun finding the big and the small of what’ll affect accounting firms. With almost nothing in this budget for small business, not that that is a bad thing, I’m left to comment more broadly.

Here are my 5 budget takeaways of the things that scared me after last night:

1. Structural deficit

It’s a term that is more widely used that understood (even by me) but how a first term government fresh off an election win, being the furthest any government can be from an election cannot even announce more saving measures than spending ones makes me honestly question politicians’ ability to manage the public purse. It almost seems like the current environment renders governments (globally) from making tough and fair economic decisions.

Last night was as close to a ‘bring out your dead’ opportunity budget as you could get. Tax the rich (remove stage 3 tax cuts) and give to the poor (health, NDIS, and housing spending) under the guise of economic management would have hardly been challenged.

During a period of enormous government debt, while it isn’t beholden on a first term government to solve the problem, surely, we can expect better than to make the deficit worse than announcing more spending that saving to the tune of $10 Billion.

2. Small Business Representation, or lack there of

Small business mas mentioned 14 times in the budget, but boil that down to remove duplicates for the same purpose and you get 2 initiates out of the whole budget.

Now, this is fine, it’s not all “what’s in it for me” as I’ll cover later. There is a greater good and significant opportunities for small business that, if our representatives could stop taking selfies long enough to listen, we could try to achieve.

To see the gymnastics being performed by anyone keen to promote a small business narrative is astounding.

Industry Bodies

Individuals find it hard to affect change at scale, and in business we rely on professional bodies and associations to provide the ethical and measured 2-way translation between members needs/experience and how changes to the system affects us.

What’s disappoints me is this compulsion the bodies have more to remain relevant and keep a seat at the political table than be honest with members. While I understand the need to have a voice to enact change, the lengths our industry representatives go to promote (read suck up to) the decisions of the government of the day and spin them as some amazing achievement for small business is absurd.

Small business received $18 Million of a total of $36 Billion in announced measures, a record small amount in my living memory.

If that was all our industry leaders got for their self-indulgent selfies outside parliament house, then they got scammed.

Business Media

It’s utterly embarrassing to see the small business landscape through the current media lens of clicks, monetised add revenue and influence of so called “experts”. Those that reduce the budget to a ‘winners vs losers’ debate hurt the chances of real conversation on tax reform and budget repair.

Accountants

Accountants are the only ones that I can see being able to provide the community with practical knowledge to help businesses navigate the taxation landscape. If only our job wasn’t made harder by the representation bodies or the business media.

3. The drug of “What’s in it for me”

Structural deficit, ballooning government debt, significant economic factors affecting our future and the majority of the business media, professional bodies and commentators cannot seem to get past the vanity of the “What’s in it for me” question.

We are stuck in a cycle of spending addiction seemingly paralysed by any thought of reasonable belt tightening worried what anarchy the great unwashed mobs on social media or tabloid press will whip up.

4. Election cycles do not allow any long-term planning

The Australian economy faces all sorts of long-term issues and none of these seemingly can be even remotely addressed in the current system of election cycles.

Not to harp on it, but how a first term government fresh off an election win, being the furthest any government can be from an election cannot even announce more saving measures than spending ones makes me honestly question politicians’ ability to manage the public purse.

5. Compliance IS NOT dead (you knew I would mention it)

The ATO have received $1.9 billion to recoup $5.58 billion in additional revenue and the TPB has received $30.4 million which is expected to recoup $81.9 million.

Here are the targets:

- Multinational enterprises, large public and private businesses - $2.85 billion revenue

- Shadow Economy - $2.59 billion revenue

- Personal Income Taxation - $674 million revenue

- High-risk tax practitioners and unregistered preparers - $81.9 million revenue

For the vast (vast) majority of small business accountants, review your ITR deductions going forward, tighten up on the explanations how your claims are ‘reasonable’ and get your s100A & Div 7A house in order and you’ll be fine.

For any agents in the shadow economy or who are high-risk or unlicenced, then you were in strife anyway and (hopefully) cleaning up that small segment of the market will better the industry overall.

There is a lot of compliance work coming, be ready and be confident to have a pricing conversation up front the ATO do come knocking. We are ATO whisperers, and our clients will pay for that service.

Paul Meissner is the Head of Compliance at 5 Ways Accountants and co-host of From the Trenches Real Life in the Accounting Industry