Federal Budget Tax Impact 2023/24

Instant Asset Write Off

With the Temporary Full Expensing measures legislated under the previous coalition government scheduled to end on 30 June 2023, the instant write-off threshold for small businesses would have reverted to $1,000 for next financial year.

However, some good news is that the government announced that they are increasing the write-off threshold to $20,000 for small businesses (with an aggregated annual turnover of < $10 M). They have limited this provision to the 2024 financial year only at this point.

Small Business Energy Incentive

Small and medium businesses (aggregated annual turnover of < $50 M) will be eligible to receive an additional 20% tax deduction on expenditure supporting electrification and more efficient use of energy. There is a $20,000 cap on the maximum deduction you can receive so therefore costs of up to $100,000 will be eligible for the Small Business Energy Incentive.

So what assets are eligible for this additional deductions? Below is taken from the budget paper:

“Assets that upgrade to more efficient electrical goods such as energy-efficient fridges, assets that support electrification such as heat pumps and electric heating or cooling systems, and demand management assets such as batteries or thermal energy storage. Full details of eligibility criteria will be finalised in consultation with stakeholders”

Similar to the instant asset write off provision, the asset must be first used or installed ready for use between 1 July 2023 and 30 June 2024.

Payday Super

Currently, employers are legally obligated to pay super guarantee for their employees within 28 days of the end of each quarter (i.e. 4 times per year).

The government have announced they intend to impose a requirement for employers to pay super guarantee at the same time as wages, with a view to ensuring employers are paying super on time and in full. This new measure is referred to as “Payday Super”.

This means, if you pay your employees as often as every week, you will also need to pay your super obligations weekly and factor this cash outflow into your budgets. Payday Super is proposed to be introduced from 1 July 2026.

Superannuation Additional Tax

As previously announced by the government, the budget included a proposal to reduce the superannuation tax concessions available to individuals with a member balance of > $3M. Tim O'Brien’s blog on Proposed Superannuation Changes provides further details on how this is proposed to work.

Medicare Levy – Personal Income Tax

The Medicare Levy is a 2% tax all individuals pay when lodging their personal income tax (unless exempt or under the low income threshold).

The government have proposed exempting eligible lump sum payments from paying Medicare Levy (starting 1 July 2024) and also increasing the low income threshold (starting 1 July 2022).

That’s it from me! If you have any questions or concerns about the budget our team are here. BLG Business Advisers are Wollongong Accountants who service all around Australia, so talk with us for more information and advice to help you out.

We wish you and your business every success!

*This information is relevant at the time of publishing and is subject to change*