What does the 2023/24 federal budget mean for your business?

The small business lodgement penalty amnesty program is a great opportunity for small business owners who have fallen behind on their tax obligations. This program allows you to lodge your overdue tax returns and business activity statements (BAS) without paying any penalties for late lodgement. ​

For example, if you missed the lodging deadline for your 2020/21 income tax return or your December 2021 BAS, still have between the 1st of June 2023 and the 31st of December 2023 to lodge them and avoid any failure-to-lodge penalties.​

However, not all small businesses are eligible for this amnesty. It only applies to the income tax and BAS that were originally due between the 1st of December 2019 and the 28th of February 2022.  You must also have an aggregated turnover of less than $10 million to qualify. If you’re unsure of your eligibility or how to lodge your outstanding returns, get in touch with your accountant for more guidance. Don’t miss this chance to clear your outstanding debt and avoid future penalties!​

Instant asset write-off is a tax incentive that allows you to deduct the full cost of eligible assets from your taxable income in the year you purchase them, rather than depreciating them over several years. The goal here is to help reduce tax bills and free up cash flow.​

From the 1st of July 2023 to the 30th of June 2023, the government has announced the return of the instant asset write-off threshold of up to $20,000 (per asset) for businesses with an aggregated turnover of less than $10 million. This means you can invest in new equipment, machinery, vehicles, or technology for your business in one go and claim the full cost as a tax deduction in the same year. However, it’s worth noting that eligible assets must be first used, or installed ready for use, between the 1st of July 2023 and the 30th of June 2024.​

To claim the instant asset write-off, you need to keep records (such as receipts, invoices, and bank statements) of your purchases, and report them in your tax return. You can claim multiple assets under the scheme, as long as each one is below the $20,000 threshold. If you buy an asset that costs more than $20,000, you can’t claim the instant asset write-off, but you still can depreciate it over years*. ​

This instant asset write-off scheme is a temporary measure and will end on the 30th of June 2024. It’s recommended to check with your accountant before making any decisions based on it. If you don’t have an accountant, you can talk to one of our team members or sign up for free with Beany. ​

*The depreciation method used would be the small business simplified depreciation pool method (depreciation of 15% for the first income year, and 30% each subsequent year). ​

The Federal Budget for the 2023/24 financial year has some good news for small businesses that want to save money and reduce their environmental impact. ​

Businesses with an annual turnover of less than $50 million will have access to a bonus 20% tax deduction for eligible assets which support electrification and more efficient use of energy (such as solar panels or batteries). This can help business owners save money on their energy bills while reducing their carbon footprint.​

Some assets that qualify for the incentive include energy-efficient fridges, electric heating or cooling systems, batteries, and heat pumps. You can claim an incentive on eligible expenditures of up to $100,000. This incentive will apply to assets that are first used (or installed and ready for use) between the 1st of July 2023 and the 30th of June 2024.​

This is a part of the government's plan to lower emissions and transition to a clean energy future. If you’re keen on upgrading to energy-efficient assets, consult with your accountant to get more information - they can help you determine your eligibility, and how to claim the bonus tax deduction.​

One of the highlights of the federal budget is the GDP uplift for GST and PAYG instalments. A change in GDP uplift factor will be used for PAYG and GST instalments from 12% to 6%. The reduced percentage will be introduced after the enabling legislation receives royal assent, with the reduction relating to instalments for the 2023–24 income year.​

Ultimately, this means businesses and self-employed people* will pay less tax in advance, and more at the end of the year instead. The aim of this policy is to boost economic growth and recovery after the pandemic, as well as to reduce compliance costs and cash flow pressures taxpayers face.​

*Small businesses and individuals who are eligible to use the relevant instalment methods (up to $10 million aggregated annual turnover for GST instalments and $50 million annual aggregate turnover for PAYG instalments).​

From the 1st of July 2025, if you have a total superannuation balance (TSB) of more than $3 million, you’ll need to pay an extra 15% tax on any earnings above that threshold. The goal here is to reduce the tax concessions for high-income earners and improve the sustainability of the super system. If your earnings to assets are below the $3 million threshold, it’ll continue to be taxed at 15% within the superannuation fund (or 0% if held in a pension account). ​

If you wish to know more about this change and how it impacts you and your business, speak to your accountant. They can help you assess your situation and explore options to optimise your Super. ​

All business owners should be aware of the changes relating to Superannuation in the budget. From the 1st of July 2026, you’ll need to pay your employees’ Superannuation Guarantee (SG) entitlements on the same day you pay their salary and wages. ​

For example, if you pay your employees’ wages fortnightly, but their super quarterly, you'll now need to pay their super every fortnight. However, you have plenty of time - the 2026 start date gives you ample time to make any necessary system and cash flow changes. ​

If you’re not sure how it will impact your business, don’t hesitate to contact your accountant. ​

Another essential measure that was introduced in the budget to support the innovation and growth of small businesses is the Industry Growth Program. This new initiative will launch in late 2023, and provide $392.4 million to startups and SMEs, commercialising their ideas and growing their businesses. To find out more, head over to Industry Growth Program.​

These were some of the key highlights of the 2023/24 federal budget. For more detailed information, please visit the official Budget 2023 - 2024 website. ​

Here are some practical tips from our accountants:​

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