Budget Highlights for Business

While the recent Federal Budget provided few surprises for business and avoided any significant tax reform, there were a few announcements which will be of interest to many of our business clients.

1. Instant asset write off

$20,000 small business instant asset write-off

Small businesses, with an aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.

“Immediately deductible” means a tax deduction for the asset can be claimed in the same income year that the asset was purchased and used (or installed ready for use). 

The write-off applies per asset, so a small business can deduct the cost of multiple assets.The rules only apply to assets that fall within the scope of the depreciation provisions. Expenditure on capital improvements to buildings that falls within the scope of the capital works rules is not expected to qualify.

Synectic comment:

This announcement effectively confirms that the temporary full expensing rules, which have provided an immediate deduction for the full cost of assets acquired, will come to an end on 30 June 2023. Small business entities that are considering acquiring depreciating assets with a cost of $20,000 or more and business entities with aggregated turnover of $10 million or more should keep this cut-off date in mind as 30 June 2023 approaches.

2. Energy boost to small business 

Small Business Energy Incentive

As previously announced, the Small Business Energy Incentive provides an additional deduction of 20% of the cost of eligible depreciating assets that support electrification and more efficient use of energy.

Up to $100,000 of total expenditure will be eligible, with a maximum bonus deduction of $20,000.

The incentive is available to small and medium businesses with aggregated annual turnover of less than $50 million.

While the full detail of what qualifies for the incentive is not yet available, it is expected to apply to a range of depreciating assets and upgrades to existing assets such as electrifying heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps.

Some exclusions will apply including electric vehicles, renewable electricity generation assets, capital works, and assets that are not connected to the electricity grid and use fossil fuels.

Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024 to qualify for the bonus deduction.

3. Superannuation to be paid with wages

Super guarantee entitlements on pay day

As previously announced, from 1 July 2026, employers will be required to pay their employees’ super guarantee (SG) entitlements on the same day that they pay salary and wages. Currently, SG is paid quarterly.

This gives businesses and superannuation funds three years to prepare. Some businesses need to start this work sooner rather than later. Significant administration changes will be required for this transition to be successful.

The Government will undertake a consultation process with the aim of providing details of the final design of the measure in the 2024-25 Federal Budget.

Synectic comment:

While we support this announcement, it will have some administration and cashflow implications for small business as they transition from quarterly to weekly. Pleasingly, this announcement gives businesses and superannuation funds three years to prepare. 

What next?

Our business advisers can help you prepare your business for these changes. Get in touch with us today.

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About the author

Gareth Atkins Chartered Accountant Devonport Tasmania
Gareth Atkins

Gareth has over 30 years’ experience providing business and corporate advisory services. A director of Synectic since 2005, he has been at the forefront of growing our firm, including overseeing our state-wide expansion and the development of our self-managed super fund and financial services divisions.

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