Insights into the Federal Budget: Key Takeaways for Businesses

At Star & Associates, we are committed to keeping our clients informed about the latest developments that affect their businesses. 

While Budget 2023 was a fairly limited budget in terms of support for businesses, we have compiled some key takeaways worth considering:

Small business measures

Temporary Increase in Instant Asset Write-Off Threshold:

From July 1, 2023, until June 30, 2024, small businesses with an annual turnover under $10 million will benefit from an increased instant asset write-off threshold. The threshold will rise from $1,000 to $20,000, allowing immediate deductions for eligible assets costing less than $20,000. Assets valued at $20,000 or more will be placed in the simplified depreciation pool.

Small Business Energy Incentive:

Small and medium businesses with an aggregated annual turnover under $50 million will be eligible for a Small Business Energy Incentive. This incentive enables businesses to deduct an additional 20% of the cost of eligible depreciating assets that support energy efficiency and electrification. Expenditure up to $100,000 will be eligible, with a maximum bonus deduction of $20,000.

Lodgment Penalty Amnesty Program:

To encourage small businesses with a turnover under $10 million to re-engage with the tax system, a lodgment penalty amnesty program will be introduced. The amnesty will remit failure-to-lodge penalties for outstanding tax statements originally due between December 1, 2019, and February 28, 2022, provided they are lodged between June 1, 2023, and December 31, 2023.

Tax audit focus areas

The federal budget also highlights the government’s commitment to enhancing tax compliance through the below measures. 

  • Extending the compliance program for personal income tax – The Government will provide $89.6 million to the ATO and $1.2 million to Treasury to extend the Personal Income Tax Compliance Program for two years from 1 July 2025 and expand its scope from 1 July 2023. 
  • Improving engagement with taxpayers to ensure timely payment of tax and superannuation liabilities – The Government will provide funding over four years from 1 July 2023 to enable the ATO to engage more effectively with businesses to address the growth of tax and superannuation liabilities. 
  • Investing in superannuation guarantee compliance – The Government will provide $40.2 million to the ATO in the 2024 income year, including $27 million for the ATO to improve data matching capabilities to identify and act on cases of superannuation guarantee underpayment by employers.
  • Four-year extension for GST compliance program – The Government will provide $588.8 million to the ATO over four years from 1 July 2023 to continue a range of activities that promote GST compliance.

FBT – Electric car discount 

The eligibility for the Fringe Benefits Tax (FBT) exemption for plug-in hybrid electric cars will be phased out from April 1, 2025, with arrangements entered between July 1, 2022, and March 31, 2025, remaining eligible until that date.

Get in touch

At Star & Associates, we understand the importance of staying informed about the latest developments in the business landscape. The recent release of the Federal Government’s latest Budget has introduced several measures that will undoubtedly shape the business community.

If you have any questions or would like to explore how these measures might affect you, reach out for a conversation today.