On the 9th May, Federal Treasurer Jim Chalmers delivered the 2023-2024 budget. As expected a budget surplus was delivered for the first time since the Global Financial Crisis, albeit noted as only temporary. This budget is focused on cost of living measures with targeted support for individuals and families as opposed to major tax reform or substantial support for small businesses.
Key headlines from the budget are as follows:
- Increase to the Medicare levy low-income thresholds from 1 July 2022
- Other Measures to assist with cost of living – some that are not directly managed through the tax system including tripling the bulk billing incentive for doctors and energy price relief for targeted households.
- The Low and Middle Income Tax Offset is not coming back for 2023, reducing tax refunds for some by up to $700.
- No change to the already legislated tax cuts set to start from 1 July 2024.
Temporary increase to the Instant Asset Write-off threshold
Whilst the temporary full expensing measures will end on 30 June 2023, the budget does allow for assets costing up to $20,000, purchased and in place ready for use between 1 July 2023 to 30 June 2024 to be expensed in full.
- If you’re in process of purchasing new assets at the existing higher threshold, these need to be installed and ready for use before 30 June 2023 rather than just invoiced or paid for.
- If you’re selling an asset which has been fully expensed previously, the full sale price ex GST will be taxable income.
Small Business Energy Incentive
There will be a 20% additional deduction for new depreciable assets that support electrification and more efficient use of energy, with a maximum additional deduction of $20,000. These will need to be first installed or used between 1 July 2023 and 30 June 2024. Specific details of what qualifies will be released at a later date however it will specifically exclude electric vehicles.
Build-To-Rent project incentives
Details of eligibility will be confirmed at a later date but the proposed eligibility is limited to projects that:
- Consist of 50 or more apartments or dwellings that are made available for rent to the public, are held under single ownership for at least ten prior to being sold and offer a lease term of at least three years.
Superannuation guarantee to be paid on payday from 1 July 2026
Where an employer seeks to reduce the frequency of pay periods (eg change from weekly to fortnightly or monthly) we recommending referring to relevant Industrial Awards and seeking employment law advice as this may not be possible. This is likely to provide significant cashflow challenges for some businesses.
FBT exemptions for plug-in hybrids set to end 31 March 2025
PAYG Income tax instalments will only increase by 6% instead of the statutory 12% from 1 July 2023 to 30 June 2024.
Cyber Security/Cyber Wardens
$23.4 million will be allocated to help small businesses build resilience to cyber security attacks by training in‑house cyber wardens.
Industry Growth Program
Funding of $392.4 million will aim to help support small to medium-sized businesses and startups develop new products and services to grow their operations.
Increased tax on superannuation balances in excess of $3 million confirmed
The Government still intends to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025.
- Note, this is proposed to include tax on unrealised gains which may prove problematic for super funds with illiquid assets.
Additional funding for various areas of targeted ATO compliance was announced. Areas included GST, individual income tax, superannuation guarantee and multinationals. Mitigation steps such as audit insurance may prove beneficial if taxpayers are to expect a greater level of audit activity.
For more detail please see the full budget report from NTAA here.