Federal budget: The accounting profession delivers its verdict

Treasurer Jim Chalmers handed down the 2024-25 Federal Budget last night which contained significant investment towards a shift towards clean energy and cost of living relief.

CPA Australia said small business owners across Australia were likely underwhelmed by this year’s budget with most of the investment incentives announced for select industries only.

CPA Australia chief executive officer, Chris Freeland said small businesses desperately needed a budget that would help alleviate the cost pressures they are facing on a daily basis.

The budget outlined some cost-of-living relief for Australian households, but it only included a small amount of energy cost relief for struggling small businesses, Freeland noted.

“Fuel costs, power bills and various other inflationary pressures are having a hugely detrimental impact on many small businesses,” he said.

“While the emphasis on relieving pressures on household finances was expected, a more business-centric budget would benefit all Australians as small businesses are significant contributors to the economy and job creation.”

The Council of Small Business Organisations Australia agreed that the budget was a “missed opportunity to back small business”.

COSBOA said whilst some measures were welcomed, small business has been left behind in the government’s strategy of picking winners and providing subsidies to selected industries.

“The extension of existing measures; the instant asset write-off, NewAccess for Small Business Support, the Small Business Debt Helpline, Productivity, Education and Training Program, as well as energy bill relief are necessary but not sufficient to truly address the issues currently facing small business,” COSBOA said.

“COSBOA was hoping to see a budget that provided a vision for productive and prosperous small business. An operating environment that would see small business protected and incentivised to invest, to employ more people, to adopt modern techniques so that the small business sector continues to grow, compete and contribute to the success of the Australian economy.”

Chartered Accountants ANZ senior tax advocate Susan Franks said she welcomed the extension of support for small businesses but remains concerned at the growing list of announced by unenacted tax measures.

“It is disappointing that the government has not continued the 120 per cent boost for training and the transition to energy efficient assets for small business when there is a large need for trained staff and for all businesses to reduce their carbon footprint,” she said.

CA ANZ is also calling on the government to legislate this and other changes that are still stalled in parliament.

“The extension of the instant asset write-off in last year’s budget and the 120 per cent boost for energy efficient assets are still languishing before Parliament,” Franks said.

“Small business owners or sole traders who may want to take advantage of these measures are holding back until they have certainty that their investment will receive the benefits they’ve been promised.

Further tinkering with instant-asset write off

The government has also confirmed that the increased threshold for the instant asset write-off scheme for small business will be extended for the 2024-25 income year.

Parliament is still yet to pass the extension for the 2023-24 income year that was announced in the previous year.

The Support for Small Business and Charities and Other Measures bill was originally set to increase the threshold for the instant asset threshold to $20,000.

However, amendments made to the bill by Senator Jane Hume, will mean an increase in the threshold to $30,000, if passed by the lower house.

The government announced in the latest 2024 budget that it intends to set the threshold for the scheme at $20,000 for the 2024-25 income year.

Treatt said there remains a lot of uncertainty around the instant-asset write off measure with the previously announced extension still yet to pass Parliament.

“We’ve still got uncertainty as to what we have for this year. Originally it was going to be a $20,000 threshold with a $10 million cap. The Senate has then amended that to a $30,000 threshold with a $50 million cap and sent that back to the House of Representatives to pass.

“[The government] is now saying ‘well we’re extending it by another 12 months but based on the original proposal.

“We’re now in a more uncertain position because not only are we uncertain around what the measure will be for FY 2024, but we don’t know how that will now play out for FY 2025.”

A compliance focused budget

BDO national leader, tax technical Lance Cunningham said there was considerable investment in the ATO compliance activities in this year’s budget.

Cunningham noted the $187 million the government plans to invest over four years from 1 July 2024 in relation to counter fraud strategies for the ATO.

The Budget papers said this will strengthen the ATO’s ability to detect, prevent and mitigate fraud against the tax and superannuation systems.

The government also intends to extend the ATO’s Shadow Economy Compliance Program and its Tax Avoidance Taskforce for two years from 1 July 2026.

“Extending the Taskforce ensures the ATO continues to be well-resourced to pursue key tax avoidance risks, with a focus on multinationals, large public and private businesses, and high-wealth individuals,” the budget papers said.

The Tax Institute said that from a tax perspective, it was very much a “compliance focused budget”.

“We saw a lot of extensions of taskforces and activities around fraud,” said Treatt.

“The Tax Institute has long called for more certainty in the funding of the ATO rather than relying on these taskforces. We need to ensure that we get the right resources into the right areas so that the ATO can provide the right advice and guidance for certainty in the tax system.”

Susan Franks said combatting tax fraud was the "tax centre piece of the budget" and was likely driven by the fallout from Operation Protego.v

“Businesses expecting fast business activity statement refunds may be in for a shock. The ATO has been given the power to retain those refunds for 30 days, rather than the current 14 days, to give the ATO time to ensure that its systems are appropriately preventing fraud,” said Franks.

“While the ATO has been allocated extra resources, the Inspector General of Taxation and Taxation Ombudsman (IGTO), the key agency which helps taxpayers deal with the monolithic ATO has not received any significant additional funding.”

The government also plans to make amendments to the tax law to provide the Commissioner of Taxation more discretion over the treatment of old tax debts on hold from before 1 January 2017.

The budget papers state that under the proposed amendments, the Commissioner of Taxation will be given discretion to “not use a taxpayer’s refund to offset old tax debts, where the Commissioner had put that old tax debt on hold prior to 1 January 2017”.

“This discretion will apply to individuals, small businesses and not-for-profits, and will maintain the Commissioner’s current administrative approach,” the budget papers stated.

Treatt said the ATO is likely to apply this discretion on a case by case basis.

“The way that Treasury is describing it in the papers, ultimately it’s formalising the Commissioner’s administrative approach in the past.”