Now that the ink has dried on last week’s Australian Federal Budget, which was largely focused on alleviating cost-of-living pressures across the nation, we can evaluate what this means for businesses.
Here is a summary of the key the Federal Budget announcements impacting business owners.
Australian Federal Budget Summary for Business Owners:
Small Business Instant Asset Write Off: $20,000 threshold for 2023–2024
Temporary Full Expensing will end on 30 June 2023. From 1 July 2023 to 30 June 2024, the Government will temporarily increase the instant asset write-off threshold to $20,000 for small businesses with an aggregated turnover of less than $10 million.
Small businesses can immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed and ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per-asset basis, so small businesses can instantly write off multiple assets.
Currently, there are no thresholds and businesses with an aggregated turnover of less than $5 billion can claim the full value of eligible depreciating assets.
The Small Business Energy Incentive: 20% bonus deduction
A bonus deduction of 20% on certain expenditures towards electrification and more efficient use of energy will be allowable for entities with an aggregated turnover of less than $50 million.
This will be available for a range of depreciating assets and upgrades to existing assets, such as energy-efficient goods like energy-efficient fridges, assets that support electrification such as heat pumps and electric heating or cooling systems, and demand management assets such as batteries or thermal energy storage. Exclusions such as electric vehicles, renewable electricity generation assets, capital works, and assets not connected to the electricity grid and using fossil fuels will apply.
Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.
Employers will be required to pay their employees’ super at the same time as their salary and wages rather than quarterly from 1 July 2026.
The government also intends to include payment of superannuation in wage-theft laws, to be introduced in late 2023.
Small business lodgement penalty amnesty
A lodgement penalty amnesty program will be provided for small businesses with an aggregated turnover of less than $10 million to encourage them to re-engage with the tax system. The amnesty will remit failure-to-lodge penalties for outstanding tax statements lodged from 1 June 2023 to 31 December 2023 that were originally due from 1 December 2019 to 29 February 2022.
Hydrogen Headstart Program
The $2 billion ‘Hydrogen Headstart’ program was announced to support large-scale renewable hydrogen projects and Australia’s growth in the global sector. The funding will provide revenue support for large-scale renewable hydrogen projects through competitive hydrogen production contracts.
This investment will accelerate Australia’s hydrogen industry development, catalyse clean energy industries, and help Australia connect to new global hydrogen supply chains, to take advantage of hydrogen’s jobs and investment potential.
$2.0 million has also been allocated to establish a fund to support First Nations people and businesses to engage with hydrogen project proponents, planning processes and program design.
Critical Minerals International Partnerships
Critical minerals are essential inputs to clean energy technologies like electric vehicles and wind turbines. A $57.1 million program was announced to support commercial partnerships in critical minerals supply chains to develop Critical Minerals International Partnerships to secure strategic and commercial partnerships.
This program aims to step up international engagement, attract investment from like-minded partners, accelerate strategic interest projects, and build on the $2 billion Critical Minerals Facility and $1 billion targeted to value-adding in resources under the National Reconstruction Fund.
Powering the Regions Fund
As part of the Government’s Powering the Regions Fund, the $400 million Industrial Transformation Stream will support the growth of new clean energy industries in regional areas and innovative efforts to decarbonise existing industrial activities.
It will provide grant funding to support the development of clean energy industries by investing in sovereign manufacturing capability of critical inputs, such as steel, cement, lime, and aluminium.
And there you have our take on the Federal Budget key points which are impacting business owners. For an in-depth analysis of the 2023-2024 Federal Budget, check out Moore Australia’s comprehensive analysis.
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Please note that the information provided is general and does not constitute financial, tax or other professional advice. You should consider whether the information is appropriate for your needs and seek professional advice before making any decisions.