Federal Budget 2023-2024

Federal Budget 2023-2024 – More Good News than Bad News for Business Owners

Last night, the Treasurer delivered the federal budget for 2023-2024, announcing a budget surplus for the first time in 15 years.

On the face of it, the budget was full of discrete measures targeted to assist those in society deemed most in need of help.

However, we have delved deeper into the details of the budget and discovered that there is still more good news than bad news out of this budget for small and medium business owners and associated families.

We have summarised below our view of the top things our Macro clients need to know.

Good News

1. The Stage 3 Tax Cuts remain intact and will come into effect on 1 July 2024. By implementing a 30% marginal tax rate for individuals earning between $45,000-$200,000, business owners will enjoy a lower tax burden when planning their tax affairs.
2. While not as generous as its current unlimited form, the Instant Asset Write-Off will be reinstated for the 2023-2024 financial year for businesses with annual turnover of less than $10 million. These businesses will be able to immediately deduct the full cost of eligible assets costing less than $20,000.
3. Small and medium businesses with annual turnover of less than $50 million will benefit from the Small Business Energy Incentive. This incentive will grant a 120% tax deduction for the cost of assets installed in 2023-2024 which support electrification and the more efficient use of energy, up to a maximum spend of $100,000.
4. Small business customers of electricity retailers will qualify for energy bill relief.
5. From 1 July 2023, concessions to visa rules will allow eligible international graduates of Australian institutions to work in Australia for an extra two years.
6. Increased funding to Medicare, including the tripling of bulk billing incentive benefits for certain patients, will facilitate the ongoing viability of practitioners seeking to provide crucial but affordable services to patients.
7. There will be incentive to assist with training for Cyber Wardens within small business to assist with combating ongoing cyber threats.
8. The Home Guarantee Scheme, which supports the purchase of a home by first home buyers and single parents with a reduced deposit, will be expanded to allow for joint applications by parties who are not spouses or de-facto partners.

Bad News

1. From 1 July 2026, payment of employees’ superannuation guarantee entitlements will need to be made on the same day that the corresponding salary or wages are paid. (aka “Pay Day Super”).  While this is good news for actual employees as it will help boost their retirement savings we acknowledge the significant cashflow impact on employers.
2. There is no change to the proposal previously announced to impose, as from 1 July 2025, an additional 15% tax on the earnings on superannuation balances which exceed $3,000,000.
3. Despite pushing investment in electrical assets, electric vehicles will be excluded from the Small Business Energy Incentive.
4. As from 1 April 2025, plug-in hybrid vehicles will no longer qualify for the exemption from Fringe Benefits Tax (FBT) which currently exists.
5. Funding for the Export Market Development Grants (EMDG) program will continue to be reduced, further diminishing prospective future claims available to businesses under the program.

In addition to these measures, we are cautiously optimistic about Treasury’s prediction that inflation will decrease to approximately 3% in the next two years, which hopefully should ease pressure on costs to businesses. This outcome is vital to the long-term sustainability of businesses, especially now that the government is unwinding the many generous concessions which were available to businesses since COVID.

Please call or click to discuss with a Macro Group Team Member if you would like further information.

The Macro Group Team

Date: 10/05/2023
 
The Macro Group Limited AFSL:485843 Tax Agent Number 24 76 5236.

The information in this article  contains general information only. We have not taken into consideration any of your personal objectives, financial situation or needs. Before taking any action, you should consider whether the general advice contained in this communication is appropriate to you having regard to your circumstances and needs, and seek appropriate professional advice if you think you need it. We recommend that you consult a licensed or authorised financial adviser if you require financial advice that takes into account your personal circumstances.