Federal Budget 2023 – Summary of key points for businesses
May 11, 2023
Federal budget 2023 – How will it affect my business?
While much of the 2023 federal budget focuses on providing help to reduce cost of living pressures, there are some key points affecting businesses. Significantly, the Federal Budget for 2023 does not impose additional taxes on business. The previous small business incentives for businesses to purchase additional assets and equipment have been extended, albeit at a much smaller threshold. Keep in mind, these Federal Budget measures for 2023 are yet to be approved, so changes can still happen.
Here is a summary of the key points:
Small business lodgment penalty amnesty
Are you a small business that has fallen behind in ATO lodgments and been hit with late fees? The ATO will offer amnesty from this debt, with the following conditions:
- Aggregate turnover of less than $10m
- Remittance of failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022
Payday super
- Employers will have to pay their employees’ super guarantee at the same time as their salary and wages from 1 July 2026
- Currently, employers only have to contribute to super once a quarter
Tax-related measures announced
Small businesses instant asset write-off threshold
- The threshold will be increased to $20,000 for 2023-24 for businesses with aggregated annual turnover of less than $10m
- The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets
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Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter
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The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will continue to be suspended until 30 June 2024
Small Business Energy Incentive
- Additional 20% deduction on spending that helps businesses become more energy efficient
- Can be claimed by businesses with annual turnover of less than $50m
- Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024
Small business unpaid tax and super
- Additional funding to help the ATO to work with taxpayers who have high-value debts over $100,000 and debts older than 2 years where those taxpayers are either public and multinational groups with an aggregated turnover of greater than $10m, or privately owned groups or individuals controlling over $5m of net wealth
- This will apply from 1 July 2023
PAYG and GST instalment uplift factor
- 6% for 2022-23 (being lower than the 12% rate that would otherwise have applied under the statutory formula)
Part IVA (Anti-avoidance measures)
- The Scope of the anti-avoidance measures contained in Part IVA are to be expanded to catch 2 additional types of scheme from 1 July 2024, regardless of whether the scheme was entered into before that date
FBT rules for electric vehicles (EVs)
- Eligibility of plug-in hybrid electric cars will sunset from 1 April 2025 from the FBT exemption for eligible electric cars
Personal tax rates unchanged for 2023-24
No changes to Stage 3 personal income tax cuts (to commence 1 July 2024)
The Federal Budget 2023 announcements confirmed that the planned income tax cuts to commence 1 July 2024 would go ahead as unchanged.
- As previously legislated, from 1 July 2024, the 32.5% marginal tax rate will be cut to 30% for one big tax bracket between $45,000 and $200,000
- More closely align the middle tax bracket of the personal income tax system with corporate tax rates
- The 37% tax bracket will be entirely abolished, leaving 3 personal income tax rates (19%, 30% and 45%)
- Around 94% of Australian taxpayers are projected to face a marginal tax rate of 30% or less.
