In February, Treasurer Josh Frydenberg clarified the taxing of rapid antigen tests before signalling the winding down of COVID-era stimulus spending.
Addressing a national employer association, the Australian Industry (Ai) Group over Zoom, Treasurer Frydenberg provided a number of relevant updates and announcements that could set the tone for this year’s Federal Budget.
Of recent interest, the Treasurer announced changes to the tax implications of rapid antigen tests (RATs) purchased by businesses and distributed to their employees, effectively exempting these tests from any Fringe Benefit Tax (FBT) obligations.
The Treasurer’s clarification follows concerns raised by industry leaders (including Ai Group) on the issue of tax implications surrounding COVID-19 tests, calling on the Government to update legislation and remove additional obligations for businesses.
“COVID-19 tests are an important tool being used by businesses to protect their workforce and to ensure they can keep their doors open and our supply chains running,” Frydenberg said.
Under the updated set of tax rules, both PCR and RATs will be covered, and the scheme will be backdated to include the entirety of the 2021-2022 financial year.
In practical terms, a small business would reduce its FBT liability by about $20 for every dual pack of RATs purchased for $20 and distributed to employees.
These decisions will require a reworking of existing legislation, and has not yet received bipartisan support (the ALP has committed to make such tests available to businesses free of charge).
“Great Reshuffle” with job switching on the rise
Frydenberg’s speech also evoked the ‘Great Resignation’ as he noted more Australians are making significant career choices at the moment.
“In the last three months, a record number of around 300,000 workers say they left a job because they were looking for better job opportunities,” said Frydenberg.
According to The Conversation, an estimated one million Australians started new jobs at the end of 2021, raising the average of new job-starters to 10 per cent higher than they were pre-pandemic.
Payroll data gathered by the Government suggests those changing jobs are being paid up to 10 per cent more than they were in their previous jobs, the Treasurer said.
Notably, the Treasurer referred to this uptake in job switching as the “Great Reshuffle”, distancing the local situation from the ‘Great Resignation’ taking place in the US, where there are some 2.8 million fewer people employed than there were before the pandemic.
Increased job switching has occurred against the backdrop of Australia’s unemployment rates sitting at a 13-year low of 4.2 per cent, The Guardian reports.
Productivity will be key as support winds back
Optimistic about the near future of the local economy, Frydenberg said the business community had already “taken the baton” of recovery, and so flagged the Government’s intention to return to “normalised economic settings”.
“The economy simply cannot be conditioned to the level of unprecedented support that has been required over the last two years,” he said.
“Continued support at crisis levels would do more economic harm than good.”
As direct support measures come to a close, the Government is instead turning to focus on lifting productivity for a swifter economic recovery, and the Treasurer has said he will be asking the Productivity Commission to deliver an “actionable” roadmap of improvements to productivity as part of its second, five-yearly report.
Ai Group CEO Innes Willox hailed this particular announcement as a “most welcome” development.
“It is an encouraging recognition of the central place of improved productivity growth to Australia’s future social and economic development,” Willox said.
“Ai Group recommended the creation of such a roadmap to be included in the 2022-23 Federal Budget.
“The roadmap will be an opportunity to build on the recommendations of the first five yearly report delivered in 2017.”
This article was originally published on myob.com and has been republished with permission.