The 2023 Federal Budget dropped last night (9 May) at 7.30 pm. Amongst all the details and news you have heard, you may wonder how it affects your business.
We have gathered some key points from the budget that might impact your business.
Small Business Energy Incentive
The government has announced a new Small Business Energy Incentive, which will help small and medium-sized businesses save energy and save on their energy bills.
The incentive will provide businesses with an annual turnover of less than $50 million and an additional 20 per cent deduction on spending that supports electrification and more efficient energy use. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.
Eligible assets or upgrades must be used or installed and ready for use between 1 July 2023 and 30 June 2024.
Instant Asset Write-off
For small businesses with up to $10m in turnover, the instant asset write-off will be capped at $20,000 for one year from 1 July 2023, allowing businesses to deduct the total cost of assets up to that price that was installed or ready for use before that date.). It will revert to a cap of $1,000 in FY25 (for now).
PAYG Instalment Relief
The GDP adjustment factor will be reduced from 12% to 6% for the 2023–24 income year. This will result in lower PAYG instalment amounts being paid in Business Activity Statements (BAS) for businesses using the instalment method, e.g. paying the amount the ATO tells you to instead of calculating tax payable based on a forecast.
Additional Funding For Compliance Enforcement
The ATO will increase compliance with GST and superannuation laws with a four-year extension and a $588.8 million boost. A part of the investment is for the ATO to improve data matching capabilities with analytical tools to combat emerging risks to the GST system.
Superannuation Guarantee Contributions
From 1 July 2026, employers will be required to pay their employees’ superannuation guarantee entitlements at the same time as their salary and wages. According to super experts, it would result in some younger workers today being better off by $50,000 at retirement.
However, the government doubles the tax rate for super accounts over $3 million. From the 2025 financial year, future earnings on super balances over $3 million will be taxed at a 30 per cent rate, which the government expects to affect about 80,000 people.
Temporary Lodgment Penalty Amnesty Program
Additional funding will be provided to address the growth of businesses’ tax and superannuation liabilities, and a temporary lodgment penalty amnesty program will be provided to small businesses.
Energy Bill Relief Fund
Small businesses with a turnover of up to $50m will get a one-off payment of $650 off their power bills from 1 July 2023. To be eligible, your business must be on a separately metered business tariff with your electricity retailer. Your business’s annual electricity consumption must be less than the threshold for your state or territory. The current advice is that you don’t need to do anything; if you are eligible, you will receive relief on your electricity bills from 1 July 2023.
Transport Costs Going Up
The heavy vehicle road user charge is being raised by 6 per cent annually for the next three years from 27.2 cents per litre of diesel to 32.4 cents by 2025-26.
The change is a significant money-spinner for the government, saving $1.1 billion over four years through reductions in the cost of the fuel tax credit.
Regional And Remote Pharmacies Support
The government will support regional and remote pharmacies by investing $79.5 million over four years to double the Regional Pharmacy Maintenance Allowance. This funding supports the continued operation of around 1,093 community pharmacies in regional and rural Australia. Pharmacists will also be funded to deliver vaccines to eligible patients under the National Immunisation Program, with an investment of $114.1 million over four years.
Promoting Energy-Efficient Commercial Buildings
The government is committed to supporting investment in energy-efficient commercial buildings. From 1 July 2025, the government will extend the clean facility managed investment trust withholding tax concession to eligible data centres and warehouses where construction commenced after Budget night. Buildings must also satisfy higher energy efficiency standards to qualify for the concession.
Powering Australia Industry Growth Centre
The government is providing $14.8 million to establish the Powering Australia Industry Growth Centre, which will support Australian businesses looking to manufacture, commercialise and adopt renewable technologies. This is in addition to the up to $3 billion allocated to investment in low emissions technologies, including green metals, under the National Reconstruction Fund.
Building Disaster Resilience And Preparedness
The government is helping communities strengthen their resilience and preparedness in the face of more frequent and intense natural disasters. In 2023–24, the government will provide $200 million through the Disaster Ready Fund to support levee upgrades, seawalls and bushfire risk reduction projects.
Government Opening Green Initiative to the Private Sector
Through loans, guarantees and equity investments, the National Reconstruction Fund will partner with the private sector to invest in priority areas that leverage Australia’s natural and competitive strengths in renewables and low emissions technologies, medical science, transport, value-add in agriculture, forestry, and fisheries, value-add in resources, defence capability and enabling capabilities.
Industry Growth Program
The new $392.4 million Industry Growth Program will support Australian small to medium-sized enterprises and startups to commercialise their ideas and grow their operations. This recognises small and medium-sized enterprises’ significant contribution to transforming the Australian economy and creating new, high-skill jobs. Support will be targeted towards businesses operating in the priority areas of the National Reconstruction Fund.
Cybersecurity
The government is investing $23.4 million to help small businesses build their resilience to cyber security attacks by training in-house cyber wardens. Small companies have rapidly digitalised in the past few years, bringing new opportunities and increasing their vulnerability to cyber-attacks.
A cybercrime attack on a small business can cause significant financial and reputational damage, putting the viability of the business and the jobs it provides in the community at risk. This measure will help mitigate and reduce the harm of cyber attacks on small businesses. The Council of Small Business Organisations Australia will deliver the small business Cyber Wardens program.
Targeted Support For Apprentices
The government is redesigning Australian Apprenticeship Support Services to improve apprenticeship career pathways and provide more support for completions.
A redesigned program model will assess the needs of every apprentice to support their success, help remove barriers for women in male-dominated trades and strengthen support for First Nations apprentices, apprentices with disability and those in remote areas. These apprentices will have access to foundation skills training, personalised assistance and mentoring from commencement to completion.
Current Opportunities
Give your business the best chance to thrive in the future by utilising all opportunities available to you. The 2023 Federal Budget provides incentives that last into 2030. Set your business up for success by preparing and incorporating tax-efficient benefits.
Furthermore, as many previously instated incentives mentioned above are ending this financial year, Please make the most of the opportunities currently available for your business this tax season and contact our specialist team of advisors.
