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Federal Budget 2023 Impacts - Individuals & SME's

Now the dust has settled on Federal Treasurer Jim Chalmers budget speech delivered on Tuesday night, we summarise below the very minor implications to individuals and SME’s. In short, the budget provided greatest assistance for those in need given the inflationary pressures experienced in the Australian (and global) economy now and into the immediate future. Unfortunately, there is little joy to small businesses notwithstanding the environment they face over the next 12 months+.

Small to Medium Businesses

  • As expected, temporary full expensing rules close 30th June, 2023 (we remind clients, any assets purchased in the 2023 financial year must be taken delivery and installed ready for operation by 30th June, 2023);
  • Instant Asset Write-off arrangement will commence 1st July, 2023 and apply until 30th June, 2024. These rules apply to businesses with a turnover of less than $10m and will cover a threshold of $20,000 per asset;
  • Larger businesses turning over greater than $10m will lose the concessions previously enjoyed before 30th June, 2023;
  • Small businesses will be offered up to $650.00 per annum reduction to electricity bills;
  • Small Business Energy Incentive is proposed which will provide a 20% additional tax deduction on assets purchased (up to $100,000) that support electrification or energy efficiency. The bonus deduction will be capped at $20,000 per business;
  • FBT exemption for plug-in hybrid electric cars will end 1st April, 2025. Hydrogen and Battery Electric Vehicles will continue FBT exemption into the immediate future;
  • The previous Liberal Government proposed (2022 Budget) skills & training and digital technology boost was never legislated and did not receive a mention in this Budget announcement. Whilst there is pressure on the Government to scrap these cuts as they advantage higher income earners, there appears no change of mind from the ALP Government

Individuals

  • No change to personal tax rates;
  • No mention of “Stage 3” individual tax cuts set to commence 1st July, 2024;
  • Various cost of living relief measures for individuals – should anyone require information in respect to these, please contact our office;
  • Additional tax on super balances > $3m – application of an additional 15% tax on earnings attributed to balances > $3m. The Government appears committed to introducing this change commencing 2025/25 year. Whilst there are a number of issues to be considered here, this measure appears to impact many more individuals into the future than what we were originally communicated. Keep an eye on this proposal over the next 6 months.

Other

  • Significant financial resources are being poured into the ATO to control GST and Taxation compliance and recoup debts. You can be assured the previous “softly softly” approach from the ATO in respect to lodgements and tax payments during the pandemic is now a thing of the past. (In our negotiations with the ATO over the past 6 months on behalf of clients, we have seen a significant toughening up of requirements to commence payment arrangements which include full financials and forecasts both P & L and Cash Flow. The ATO remains supportive for the right taxpayer, however will not tolerate any taxpayer sticking their head in the sand, or avoiding communication. Additional resourcing will only increase this activity)

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