2023/24 Budget Update: Boosting Opportunities for Small Businesses and Superannuation Reforms

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We are excited to bring you the latest updates from the 2023/24 Federal Budget, delivered by Treasurer Jim Chalmers on 9 May 2023. This budget aims to provide significant support for small businesses while introducing reforms to enhance the superannuation system. In this blog post, we will delve into the key measures announced by the government and explore their implications for businesses and individuals.

Streamlining Superannuation Contributions

One of the significant changes announced in this budget is the requirement for employers to pay their employees’ superannuation contributions at the same time as their salary and wages. Effective from 1 July 2026, this measure aims to ensure that superannuation entitlements are paid in a timely manner, promoting financial security for employees in retirement.

Small Business Energy Incentive

To encourage businesses with an annual turnover of less than $50 million to invest in electrification and energy efficiency, the government has introduced the Small Business Energy Incentive. This incentive grants an additional 20% deduction on spending dedicated to these areas. By incentivizing sustainable practices, businesses can reduce their energy costs, lower their environmental impact, and contribute to a greener future.

Capital Works Tax Deduction Boost for Build-to-Rent Projects

In an effort to stimulate the housing market and increase the availability of rental properties, the government has increased the capital works tax deduction depreciation rate for eligible new build-to-rent projects. The rate has been raised from 2.5% to 4% per year. This change aims to attract investment in the rental sector and address the ongoing housing affordability challenge.

Depreciation Relief for Small Businesses

Recognizing the importance of small businesses in driving economic growth, the government has extended depreciation relief measures. After the temporary full expensing provision expires on 30 June 2023, small businesses with an aggregated annual turnover of less than $10 million will benefit from an increased instant asset write-off threshold. From 1 July 2023 until 30 June 2024, the threshold will rise from $1,000 to $20,000. Assets valued at $20,000 or more will be placed into the small business simplified depreciation pool, allowing for ongoing depreciation deductions.

Flexibility for Small Businesses in the Simplified Depreciation Regime

To offer further flexibility to small businesses, the government has suspended the provisions that prevent them from re-entering the simplified depreciation regime for five years if they opt-out. This suspension will continue until 30 June 2024, allowing businesses to adapt their depreciation strategies based on their changing needs and circumstances.

Superannuation and Tax Reforms

In addition to the measures directly impacting small businesses, the government has introduced reforms to the superannuation system and tax concessions. The non-arm’s length income (NALI) provisions, which apply to expenditure incurred by superannuation funds, will be amended and limited. This change aims to ensure that superannuation funds operate within fair and equitable parameters.

Tax concessions available to individuals with a total superannuation balance exceeding $3 million will also be reduced. By targeting these concessions, the government aims to ensure a more equitable distribution of benefits within the superannuation system.

Furthermore, lump sum payments in arrears will be exempt from the Medicare levy. This exemption provides relief for individuals who receive such payments, reducing their overall tax burden and promoting fairness in the tax system.

Stay Informed, Plan Ahead

The 2023/24 Federal Budget introduces several measures that can significantly impact businesses and individuals. As your trusted accounting firm, we will continue to monitor these developments closely and provide you with expert advice to help you navigate the changing landscape. If you have any questions or require

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