Comments on the 2023-24 Federal Budget
Treasurer Jim Chalmers handed down his second budget last night, aimed at easing the cost-of-living pressures. Inflation is at 7%, the RBA have increased interest rates 11 times in the past 12 months, energy prices are increasing and housing affordability continues to be a significant issue.
Measures announced are aimed at those most in need, including:
- increase in payments for those on income support payments, Jobseeker, single parent payments;
- workforce participation incentives encouraging those on pensions to remain or enter the workforce allowing them to earn up to $11,800 before their pension is reduced;
- changes to Medicare to incentivise doctors to bulk bill.
The legislated stage 3 tax cuts effective from 1 July 2024 remain in place.
See comments below on other incentives announced.
Cheree Woolcock, CEO and Director
Energy Efficient Assets
The 20% additional deduction available to SME’s to spend on eligible energy efficient assets as well as upgrades to electrify existing assets will be of great interest to most businesses.
Superannuation Guarantee (SG) Payments
The proposed change to the SG payment cycles from 1 July 2026 to making SG Payments on the same day as payment of salary and wages will provide significant challenges to small businesses in the transitional phase, especially for those with significant investment in working capital.
Employers will need to carefully manage their cashflow and payroll processes to ensure they can meet the more immediate payment cycle. The consultation process ahead of implementation of the changes may also provide an opportunity to reform some of the inadequacies in the current SG payment system.
It was a welcome relief, that the budget provided no big surprises in relation to superannuation matters.
The proposed additional tax on earnings on superannuation member balances above $3m from 1 July 2025, had already been announced by the Treasurer in February, and this budget only confirmed the details of that announcement.
The second superannuation budget measure was reported in the press last week and relates to a measure which increases the payment frequency of the superannuation guarantee (SG), helping deliver a more dignified retirement.
There was also an update to the non-arm’s length income (NALI) provisions relating to SMSFs and small APRA funds, which limits the tax penalty to twice the level of a general expense, where this provision applies. This is an improvement on the previous announcements but leaves other questions unanswered.
Daniel Shaw, Director & SMSF Specialist Adviser
Cost of Living
For individuals there was some relief in the budget from the inflationary and cost of living pressures facing Australians with cheaper childcare, medicine and energy relief for many households.
For SME businesses the relief re asset purchases up to $20,000 for the 2024FY, and extra deductions for energy efficiency.
For those investors wanting to build to rent – some small tax incentives to do so.
Instant Asset Write Off
Eligible small businesses will be able to access the increased instant asset write off limit of $20,000 for the 2024 income year only. Beyond 2024, the instant asset write off limit is set to revert to a $1,000 limit pending any future announcements.
This is in replacement of the fact that the temporary full expensing for acquisition of business assets will not be extended beyond 30 June 2023.
Paul Turnbull, Principal