By Chris Smith
Federal Budget – Key Takeaways
On 9 May the Government released their 23/24 Federal Budget.
There are only a few announcements impacting SME business owners.
Summary of Key Announcements:
Announcements Impacting SME Business
Instant Asset Write Off
Temporary Full Expensing will end on 30 June 2023.
In it’s place, the Government proposes to allow a $20,000 Instant Asset Write Off (IAWO) for the 2023/24 income year for entities with an aggregated turnover of less than $10 million. This requires the entity to be using the Simplified Depreciation under a General Asset Pool.
For non-SBE entities, the IAWO will revert back to $1,000.
Small Business Energy Incentive
A bonus deduction of 20% will be allowable for entities with an aggregated turnover of less than $50 million, for a range of depreciating assets and upgrades to existing assets 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.
However, certain exclusions will apply, such as:
renewable electricity generation assets;
capital works; and
assets that are not connected to the electricity grid and use fossil fuels.
Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.
Tax Compliance & Integrity Measures
The Federal Budget 2023-24 contained several tax initiatives aimed at the ATO’s recovery of outstanding tax debt and the continuation and expansion of tax and GST compliance programs (ie. more audit activity by the ATO).
This includes expanding the scope of Part IVA Anti Avoidance provisions.
The Budget did not make any comment regarding the Stage 3 tax rate and threshold changes previously legislated to apply from 1 July 2024.
However, we still have one more Federal Budget next May before these changes will actually come into effect.
Confirmation of tax on balances greater than $3 million
The Government confirmed it will implement superannuation tax changes for individuals with account balances above $3 million from 1 July 2025, including in relation to defined benefit schemes.
No reduction in Minimum Pension amounts
The minimum drawdowns for 2023/24 are therefore as follows:
For more information on these Budget announcements and potential planning opportunities, please do not hesitate to contact our office.
The information provided in this article does not constitute advice. The information is of a general nature only and does not take into account your individual situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls WA before making any decision to discuss your particular requirements or circumstances.