FEDERAL BUDGET ANALYSIS 2023
Treasurer Jim Chalmers has handed down the first surplus budget in 15 years with a focus on cost of living relief and alleviating inflationary pressures for a “Stronger Economy and Fairer Society”. The budget has directed much of the $14.6 billion package to those “most in need” or already on welfare and other government assistance programs.
The following are some of the main highlights from the Budget for business and individuals:
Small Business Support – $20,000 instant asset write-off
The instant asset write-off threshold will be increased to $20,000 from 1 July 2023 until 30 June 2024.
Small businesses with aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (which cannot be immediately deducted) must be placed into a small business simplified depreciation pool and be depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.
While the instant asset write-off will be increased to $20,000 from 1 July 2023, it should be noted that temporary fully expensing, which was introduced in October 2020 will end on 30 June 2023. Under the temporary full expensing measures, eligible businesses can claim a deduction for the full value of eligible assets with no upper limit on the asset value.
In practice, this means that eligible businesses can immediately deduct for the full cost of eligible assets up to 30 June 2023 regardless of the value. However, from 1 July 2023, the full cost of an asset can only be immediately deducted if the asset costs less than $20,000.
Tax Benefits for Business
Small Business Energy Incentive
This incentive will provide a bonus for businesses with annual turnover of less than $50 million through an additional 20 per cent deduction on spending that supports electrification and more efficient use of energy.
Up to $100,000 of total expenditure will be eligible for the incentive equal to a maximum tax deduction of $20,000 per business.
This measure is only for one year and for expenditure in the 2023-24 year.
It is also very similar to the Technology Investment Boost measure announced in the March 2022 Federal Budget.
If your business has not taken full advantage of the Technology Investment Boost, you have until 30 June 2023 to make your purchases before the initiative ends.
The Energy Price Relief Plan
A rebate of up to $325, which translates to a $650 benefit, will be available to eligible small businesses to assist with their power bills.
Personal Tax Rates
The Treasurer has confirmed that the Stage 3 tax cuts will remain unchanged at this point. However, he did not rule out reviewing this again in next year’s Budget pending economic data.
Tax cuts are due to take effect from 1 July 2024.
The Treasurer also confirmed that the Low and middle income tax offset (LMITO), which ended 30 June 2022, will not be extended.
There were no further announcements to Superannuation in the budget, The major changes to superannuation were announced prior to the budget with the changes seeking to raise additional tax revenue from the “top end of town”.
The first change announced back in February 2023, with a start date of 1 July 2025, is the introduction of an additional 15% tax on superannuation earnings where the member balance exceeds $3 million.
The other major change to commence 1 July 2026 will require employers having to pay their employees superannuation guarantee amount at the same time as they make their salary payments, instead of the current quarterly cycle.
Although not a new announcement, the superannuation guarantee rate is also set to increase from the current 10.5% to 11% from 1 July 2023 and increase again to 12% from 1 July 2025.
It’s good news for families with children in childcare and a household income below $530,000. The childcare subsidy changes will finally become reality from 1 July.
For families earning less than $80,000, the subsidy for their first child will to 90%. For those on more than $80,000, the subsidy will progressively fall based on their income.
See all the full Federal Budget 2023 here: https://budget.gov.au/