Federal budget 2023–24 to boost small business opportunities

Initiatives for small businesses

There were, however, still many new programs and initiatives announced that were designed to bolster the nation’s engine room – the small business sector.

Federal Treasurer Jim Chalmers announced a million small businesses will receive a one-off $650 cut to their power bills.

Another key measure that will affect small businesses was the extension of the instant asset tax write-off and a temporary increase of instant asset write-off threshold to $20,000 from 1 July 2023 until 30 June 2024. To be eligible, the following criteria must be met:

• Aggregated annual turnover of less than $10 million
• $20,000 threshold applies per asset, allowing multiple asset write-offs
• Assets valued at $20,000 or more can be placed into simplified depreciation pool
• Provisions preventing re-entry into simplified depreciation regime remain suspended until 30 June 2024

Federal Treasurer Chalmers also shared the following initiatives for small businesses:

• A $14.6 billion cost-of-living package
• $1.5 billion energy price relief
• Help for small businesses to adopt digital technology
• A new Small Business Energy Incentive to support investments in power-saving assets
• A $392.4 million industry grants program for commercialisation of early stage ventures
• An investment of $21.8 million to lower tax-related administrative burdens for small businesses

Technology and manufacturing sector

A range of other measures designed to boost Australia’s tech skills and manufacturing sector were also announced. These include:

• A Powering Australia Industry Growth Centre to boost manufacture of renewable technologies
• Funding for quantum computing and AI
• $286 million for investment in the creative sector
• $3.7 billion for a five year national skills agreement with states and territories
• 300,000 fee-free TAFE places to train people in critical and emerging sectors
• A new Australian Skills Guarantee to encourage more women to take-up apprenticeships

However, there were a number of initiatives relating to technology and digitising Australia’s small businesses missing from the budget:

• No changes to Skills and Training Boost and Technology Investment Boost
• Small Business Technology Investment Boost is yet to pass the Senate, expiring on June 30
• No incentives for e-invoicing, improving payment times, or enhancing support from Australian Small Business and Family Enterprise Ombudsman
• No improvements to Research & Development Tax Incentive for SMEs

Additional support for businesses

The Treasurer noted in his budget speech additional measures intended to assist businesses, to “create new opportunities across our economy.” These measures aim at improving business cash flow, reducing the burden of tax compliance, and improving the energy efficiency of small businesses, as follows:

• Tax Instalment Adjustments for Improved Cash Flow:
• GDP adjustment factor for PAYG and GST instalments reduced from 12 per cent to 6 per cent
• Cash flow support provided to small businesses and PAYG instalment taxpayers
• New rate applies to eligible businesses and individuals

• Reducing Tax Compliance Burden for Small Businesses:
• $12.8 million allocated for trial expansion of ATO independent review process
• $9 million allocated for establishing 5 new tax clinics
• Reforms include allowing tax agents to lodge multiple Single Touch Payroll forms, reducing use of cheques, and permitting up to 4 years to amend income tax returns

• Small Business Energy Incentive:
• Government incentives for small and medium businesses to improve energy efficiency
• Additional 20 per cent tax deduction for eligible depreciating assets up to $100,000
• Eligible assets include energy-efficient appliances, electrification supporting assets, and demand management assets
• Incentive period runs from 1 July 2023 to 30 June 2024
• Exclusions include electric vehicles, renewable electricity generation assets, capital works, and off-grid fossil fuel assets.

Retirement savings also in focus

A number of measures announced at this year’s budget have been designed to shake up the super system.

From 2025, earnings from superannuation funds with balances of more than $3 million will be taxed at 30 per cent, up from 15 per cent.

From 1 July 2026, superannuation contributions will be required to be paid to workers each payday.

These changes will be automatically incorporated into Intuit QuickBooks.

Emphasis on renewables

As Australia moves towards its net zero 2050 target, there is considerable funding for green energy in this year’s budget. This includes:

• $2 billion for the new Hydrogen Headstart program
• $4 billion to become a renewable energy superpower
• A Capacity Investment Scheme that will unlock more than $10 billion of investment in already-announced renewable energy projects along the east coast

Numbers tell the story

This year’s budget has been tabled in Parliament against a subdued economic backdrop. According to the federal Treasurer’s figures, economic growth is forecast to drop to 1.5 per cent in the 2024 financial year, before rising to 2.25 per cent the following financial year.

The good news is next year inflation is expected to fall to 3.25 per cent from current highs of around 7.0 per cent. It is expected to be back within the Reserve Bank of Australia’s target band of 2 per cent to 3 per cent by the 2024/25 financial year. Unemployment is expected to remain at a low of 4.25 per cent in 2023/24.

Overall, it was a more conservative budget, designed to reflect the restrained economic outlook.