Budget 2023/24 – Businesses
The 2023/24 Federal Budget was handed down on Tuesday, with a number of measures included to support businesses, including the extension of instant asset write-offs, funding for small business innovation, and changes to the way PAYG and GST payments are calculated.
Small Business Instant Asset Write-Offs
From 1 July 2023 to 30 June 2024, a $20,000 instant asset write-off will be in place for businesses with an annual turnover below $10 million.
Small business owners eligible for this extended instant asset write-off are allowed to claim a deduction of up to $20,000 for each eligible asset purchased for their business between 1 July 2023 and 30 June 2024, which must be installed and ready for use during that period.
The more generous regime of temporary full expensing ends on 30 June 2023, whereby there was no upper limit to the cost of the assets for small and medium sized businesses, apart from the normal car limit.
Small Business Energy Incentive
Businesses with a turnover of less than $50 million will receive a bonus 20% tax deduction (up to $20,000) for eligible depreciating assets up to $100,000 for energy-saving updates.
Cyber Security Incentive
The rapid digitisation of the business in recent years has left small businesses particularly vulnerable to cyber crimes, which was highlighted by a survey that found that more than 80% of small businesses weren’t prepared or equipped to deal with cyberattacks.
After multiple cyberattacks on businesses last year, the government has committed to investing $23.4 million over the next 3 years to help small businesses to protect themselves against cyber threats.
PAYG and GST Instalments
In an attempt to protect small businesses operating on thin margins, the federal budget introduces a new way of calculating the increase of Pay As You Go and GST payments. The current 12% GDP adjustment factor will be halved to a new 6% rate, a move slated to improve cash flow for 2.1 million small businesses.
Funding for small business innovation
One of the most eye-grabbing figures contained in the 2023-2024 federal budget is the $392 million assigned to launch the Industry Growth Program. The initiative will help small businesses and startups commercialise their concepts and expand their operations. Eligible businesses will need to focus on priority areas listed in the National Reconstruction Fund.
Payday superannuation and increased super compliance
Starting 1 July 2026, there will be a significant change to the Superannuation Guarantee (SG) system, with employers required to pay their employees’ SG entitlements on the same day as their salary and wages payments, instead of the previous quarterly requirement.
Additionally, to help ensure compliance and prevent underpayment of superannuation, the government will allocate $40.2 million to the Australian Taxation Office (ATO) in 2023-24. The ATO will use this funding to enhance its data matching capabilities and investigate cases of potential superannuation underpayment.
Housing Construction (build-to-rent developments)
The Government announced changes to the build-to-rent (BTR) program. For eligible construction projects (those comprising 50 or more apartments or dwellings to be held for renting) commencing after 7:30pm AEST on 9 May 2023, the measure will:
- increase the rate for the capital works deduction from 2.5% to 4%; and
- reduce the final withholding tax (WHT) rate on eligible fund payments from managed investment trusts (MITs) from 30% to 15%.
If you would like to understand how these changes impact you and your business please feel free to give us a call.