How the 2022 Federal Budget will impact your practice
This year’s Federal Budget is focused on stimulating the economy out of a COVID-19 recession, with measures aimed at reducing the cost of living and supporting small businesses.
To help you understand if the 2022 Federal Budget impacts your healthcare practice, we’ve summarised the relevant announcements below. It’s worth noting that both Houses of Parliament still need to agree to the announcements before they become legislation.
Small business technology boost
Businesses with less than AU$50 million in turnover can deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cybersecurity systems, or subscriptions to cloud-based services.
For example, for every AU$100 small businesses spend on digital technologies, you’ll receive a AU$120 tax deduction for investments of up to $100,000 per year. The boost will apply to eligible expenditure incurred from 7:30pm AEDT 29 March 2022 (i.e. Budget night) until 30 June 2023, and can only be claimed in the new financial year.
This incentive is aimed at helping you work smarter, not harder, by giving you a tax break for buying software and upskilling your staff. These days, being able to log in and access software from anywhere at any time has become the expectation for staff, providers and patients. Being tech savvy also helps you become an employer of choice, enabling you to improve employee acquisition and retention.
Now would be a good time to start identifying any technology expenditure on your accounting software (e.g. Xero, MYOB or QuickBooks). Keep track of digital cloud software costs, accounting and practice software, communication tools such as Google Chat and cloud-based work productivity tools. Regardless of any tax break, however, remember to base your decision on whether this technology is going to improve your productivity or reduce your risk.
Tax deductions for COVID-19 work-related tests
Commencing 1 July 2022, workers can claim any work-related COVID-19 tests if not paid for by their employer to attend work. The Government will also ensure that fringe benefit tax will not be incurred by employers if they provide COVID‑19 testing to their employees for work‑related purposes.
Regional telecommunications investment
AU$1.3 billion will be allocated over six years to improving regional telecommunications, including greater mobile coverage. AU$480 million has been provided to the company responsible for running the NBN to upgrade its fixed wireless and satellite networks to improve services in regional, remote and peri-urban Australia.
Health system upgrades
AU$96.8 million will be allocated over four years to system upgrades to Australia’s health system to reduce manual processing and improve claim timeframes for patients and medical providers for Medicare services, the Pharmaceutical Benefits Scheme, and other health-related payments. Remember to keep collecting and uploading useful information for Medicare compliance purposes.
Funding for My Health Record and telehealth
AU$23.8 million will be allocated over four years to My Health Record to improve integrations and provide additional funding to accredited practices for their provision of temporary telehealth services during the COVID-19 pandemic. The funding will also enable communities affected by natural disasters to access continued healthcare services via telehealth.
Practice tax compliance
There will be increased scrutiny by the Australian Taxation Office (ATO) on tax returns. Increased vigilance will also be introduced for service agreements, employment structures and contracts for registrars, patient and practitioner invoicing (which will become mandatory in the next five years), and trust structures.
Mandatory Medicare eInvoicing
Practice management billing systems will need to be electronic invoicing (eInvoicing) compliant by 1 July 2022 to avoid triggering a tax audit. Check with your software provider if you’re unsure.
Every cloud has a sliver lining: How the 2022 Govt budget that may impact your practice
We’ve made a note of the advice offered to practices, and the elements of the new budget that may impact practices, as follows. Until it is passed by Parliament it is worth keeping an eye out on some key incentives.
Federal government has introduced an incentive for business with less than AU$50 million in turnover, allowing them to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cybersecurity systems, or subscriptions to cloud-based services. For example, for every AU$100 small businesses spend on digital technologies will see them get a AU$120 tax deduction, for investments of up to $100,000 per year.
The finer details are yet to be confirmed. You cannot claim a tax deduction in this financial year, only in the new financial year until the Budget is passed by Parliament. The bottom line is the Government wants you to work smarter and not harder. So anything that can help you do more with less they are keen not only to give a tax break for the software but also for upskilling your staff. This is critical for recruitment and retention, especially when great staff are attracted to tech savvy practices. These days people expect to login from anytime from anywhere. It is becoming a new quality benchmark patients, providers and patients look for. Now would be a good time to start identifying any expenditure on your Xero,MYOB,Quickbooks or any accounting software you use.
Keep track of digital cloud software costs from websites, to new accounting or practice software, communication tools such as Google Chat and cloud based work productivity tools.Regardless of any tax break, always remember to make your decision on whether this technology is going to improve your productivity and or reduce risk and your sustainability.
Many useful software and outsourcing solutions are a great way to replace those difficult to find and or replace roles in your practice.
- Tax deductions for COVID-19 work related tests and in particular, the PCR and rapid antigen test. Commencing 1st July 2022 workers can claim any work-related tests if not paid by their employer to attend work. It is interesting to note whether PCR tests will no longer be bulk billed. There may be opportunities for practices to offer non-bulkbilled services to corporates for their employees.
- AU$1.3 billion, to be allocated over six years, for improving regional telecommunications, including greater mobile coverage. AU$480 million has been provided to the company responsible for running the NBN to upgrade its fixed wireless and satellite networks to improve services in regional, remote, and peri-urban Australia.
- AU$96.8 million over four years for system upgrades to Australia’s health system, to reduce manual processing and improve claim timeframes for patients and medical providers for Medicare services, the Pharmaceuticals Benefits Scheme, and other health-related payments. Practices should remain mindful of collecting and the timely uploading of useful and meaningful information for Medicare compliance purposes.
- AU$23.8 over four years to My Health Record to improve integrations and provide additional funding to accredited practices for their provision of temporary telehealth services during the COVID-19 pandemic, and enable communities affected by natural disasters to access continued healthcare services via telehealth.
Practice Tax Compliance
- Increased ATO scrutinization on tax returns. Introduction of Increased vigilance encouraged for service agreements, employment structures, contracts, including for registrars, patient and practitioner invoicing which will become mandatory in the next 5 years, and trust structures
- PRODA is playing a new role in ensuring appropriate compliance with State and Federal taxes such as income tax and payroll tax. For more information watch our video on Income Tax, Payroll Tax, Proda compliance – A Deep Dive Access the recording on demand here.Read the Q&A here and a follow up story and access the slide deck here.
- 1st July 2022 Mandatory Medicare e-invoicing technology consideration. A key area of concern are Practice Management billing systems and ensuring they are e-invoicing compliant by 1st July 2022. Check with your PMS vendor. This will have a systemic impact on your digital and paper workflows if you want to avoid triggering an expensive and avoidable tax audit. For more information watch our video on Income Tax, Payroll Tax, Proda compliance – A Deep Dive Access the recording on demand here.Read the Q&A here and a follow up story and access the slide deck here.
- Federal government is set to digitalise trust and beneficiary income reporting and processing as of mid-2024, which it said would give all trust tax return filers the option to lodge income tax returns electronically, increasing pre-filling and automating ATO assurance processes.
Chartered Accountant, Chartered Tax Adviser, Registered Tax Agent, Former AGPAL Surveyor 10 years of service
David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)
After a serious work related car accident in 1989, and nine operations later I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM national Board and was the inaugural national Chair of the Certified Practice Manager CPM post nominal. I continue to provide accounting tax and practice management advice to many practices all over Australia.
You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note, I am not a lawyer please seek appropriate legal and accounting advice. This information is for general information and discussion only.