The recent federal budget may not have been the most captivating for businesses, but it does bring a few noteworthy changes that business owners should be aware of. Let’s delve into the key takeaways and understand how they might impact businesses.
- Stage Three Tax Cuts: The Labor Government has kept the stage three tax cuts intact despite speculation. The Stage 3 tax cuts completely abolish the 37 per cent marginal tax bracket and lower the 32.5 per cent marginal tax rate to 30 per cent. They come into effect on 1st July 2024.
- Changes to Asset Write-Off: The temporary full expensing, or instant asset write-off, which allowed immediate deductions during the COVID period, will end at the conclusion of this financial year. Starting from July 1st, 2023, small to medium businesses can only deduct up to $20,000 per asset, while larger firms with a turnover over $10 million can only deduct assets worth less than $300.
- Small Business Energy Incentive: The government has introduced the Small Business Energy Incentive, aimed at encouraging the purchase of new and energy-efficient equipment up to $100,000. This might sound generous, but even if you were to spend the full $100,00, you’d only receive a maximum tax benefit of $9,400.
- Tax (PAYG and GST) Instalments: The Government will reduce the GDP adjustment factor for Pay As You Go (PAYG) and GST instalments from 12 per cent to 6 per cent for the 2023–24 income year. However, it’s important to note that this primarily affects cash flow and may result in slightly higher tax bills at the end of the year.
- Small Business Amnesty: Small businesses with an aggregated turnover of less than $10 million who have not lodged a tax return since December 2019, have until the end of this calendar year (December 31st) to lodge without any penalties.
- Superannuation Updates: Starting 1st July 2023, the superannuation rate will increase to 11%. Additionally, employers will be required to pay super on the same day as they pay wages. However, this change will take effect on July 1st, 2026. Furthermore, there will be an additional tax on superannuation balances over $3 million, as confirmed in the recent budget.
- Increased Compliance Activities: The Australian Taxation Office (ATO) received significant funding for compliance activities, indicating a potential increase in audits and other compliance measures in the coming years.
While the federal budget may not have brought groundbreaking business-related measures, it’s crucial for businesses to stay informed about the changes outlined above. Adapting to these alterations will help businesses navigate the evolving financial landscape more effectively and ensure compliance with tax regulations.