From energy incentives, payday super, an extension to the instant asset write-off, and halving the increase in quarterly tax, this year’s Federal Budget had some great advantages for small and medium businesses.
Every year throughout May, there’s a lot of discussion about what this year’s budget means for big businesses, small business owners, and everything in between. Here are some big wins every business owner needs to know from the recent Budget.
Instant asset write-off
An extension to the $20,000 instant asset write-off is excellent news for small businesses. You can immediately deduct the total cost from your taxes if you buy eligible assets costing less than $20,000.
This is available for businesses with a turnover of less than $10 million, and the assets must be installed or ready for first use between 1 July 2023 and 30 June 2024. This allows your business to invest in new equipment or technology and reduce your tax burden.
Small business energy incentive
The small business energy incentive is aimed at helping businesses become more energy efficient. If your business has an annual turnover of less than $50 million, you can get an additional 20% deduction on the cost of eligible assets that support electrification and more efficient energy use. This includes upgrades to energy-efficient fridges, heat pumps, electric heating and cooling systems, and batteries or thermal energy storage.
With a maximum bonus deduction of $20,000, and up to $100,000 in total expenditure eligible, it’s a great way to invest in making your business more environmentally friendly.
Lodgment penalty amnesty program
The lodgment penalty amnesty program encourages small businesses to get back on track with their tax obligations. You can participate if your aggregated turnover is less than $10 million.
The program will remit failure-to-lodge penalties for outstanding tax statements lodged between 1 June 2023 and 31 December 2023, initially due from 1 December 2019 to 28 February 2023.
It’s an opportunity to catch up on your tax filings without facing additional penalties, giving you some breathing room to get your business back on track.
Halving the increase in quarterly tax
Halving the increase in quarterly tax is a relief for small businesses. The government is reducing the GDP adjustment factor for PAYG and GST instalments from 12% to 6% for the 2024 income year.
This adjustment rate applies to small businesses and individuals with aggregated annual turnovers up to $10 million for GST instalments, and $50 million for PAYG instalments. It means you’ll have a smaller increase in your quarterly tax payments, providing some financial relief and allowing you to manage your cash flow better.
Starting from 1 July 2026, employers will be required to pay their employees’ superannuation guarantee entitlements on the same day they pay salaries and wages. Currently, this payment is made quarterly.
By aligning superannuation payments with regular payday, employees can enjoy more frequent contributions to their retirement savings, providing greater financial security in the long term.
Electric car discount
The fringe benefits tax (FBT) electric car discount is a significant change for businesses considering purchasing electric vehicles. The government will phase out the eligibility of plug-in hybrid electric cars for the FBT exemption starting from 1 April 2025.
However, if you have entered into arrangements involving plug-in hybrid electric cars between 1 July 2022 and 31 March 2025, you can still benefit from the Electric Car Discount.
This change encourages businesses to transition to fully electric vehicles, promoting sustainability and reducing emissions.
Incentivising pensioners into the workforce
The six-month extension for incentivising pensioners into the workforce is a great support measure. The government will provide a once-off credit of $4,000 to the Work Bonus income bank for aged and veteran pensioners, and a temporary increase in the maximum income bank until 31 December 2023.
Under this initiative, pensioners can earn up to $11,800 before their pension is reduced. This extension aims to empower pensioners who want to work or increase their work hours, allowing them to do so with a smaller impact on their pension income.
Knowing how these incentives and programs can help your business throughout the financial year can make a world of difference at tax time.
If you have any questions about how the Budget might affect you and your business, contact us today.