To assist business in dealing with the short-term impact of high energy prices, small business will receive some of the $1.5 billion Energy Bill Relief Fund earmarked for households and business over the next two years. For small business owners, the Commonwealth will provide a $325 rebate to eligible businesses. This is a one-off sugar hit to energy users with no spending allocated to address supply/demand issues overall.

More pragmatic is the Small Business Energy Incentive which will be attractive to business owners with turnover of less than $50 million. Up to $100,000 of total expenditure will receive an additional 20% tax deduction for eligible assets installed ready for use by 30 June 2024. Eligible investments include electrifying heating/cooling systems, installing batteries and upgrading to more efficient appliances and rangehoods.

Example:
A business with $40 million in turnover purchases a new battery system worth $50,000 and it is installed at their factory by 30 June 2024. On top of ordinary expense or depreciation deductions, the business will receive an additional $10,000 deduction for the system, effectively reducing the after-tax cost to $27,500.

The instant asset write-off scheme that was first introduced in 2012 and expanded in successive Budgets through to 2021, is now back on the table after dying a quick death just over 12 months ago. The last expansion of the scheme in 2021 made it possible for businesses with turnover of up to $5 billion to immediately write-off the full value of any asset, effectively reducing the cost of assets by the 25% corporate income tax rate.

In this year’s Budget, we see its return (but not one with vengeance). From 1 July 2023, there will be a cap of $20,000 on assets eligible to be written-off. This limit is per asset, meaning multiple assets less than $20,000 can be purchased and written-off.

With the generous write-offs from the 2021 Budget available until 30 June 2023, motivated and cashed-up businesses will see this as the time to buy those utes, machinery, equipment.

You’ve heard of the fire warden, now meet your cyber warden. $23 million of funding will go to support small businesses build systems and capacity to protect themselves against cyber threats. Following the Medibank and Optus hacks of 2022, businesses should be taking their online business hygiene more seriously and the Government is providing some assistance to do that.

In what looks like a pared back Morrison/Frydenberg policy, the Industry Growth Program will provide $392 million of grants to startups and small-medium enterprise to commercialise ideas and grow operations. Priority will be given to those business in areas identified in the National Reconstruction Fund as being strategically important; renewables, medical science, transport, agriculture and defence, amongst others.

Other Budget measures that are relevant to small-medium business:

• Tax instalments: the adjustment factor for PAYG and GST instalments to be halved, from a 12% increase to 6%, reflective of lower GDP growth expected in 2024; overall, this is simply a timing issue and will be redressed in the 2025 financial year.

• Small business tax compliance: a lodgement penalty amnesty program for late payments going back to 2019, designed to encourage business to clear out their tax liabilities, and almost $600 million over four years to improve GST compliance (read: watch out cash jobs).

• Reducing regulatory burdens: from 1 July 2024, accountants and tax agents can file multiple Single Touch Payroll forms rather than the employers having to do so.

• Foreign workers: student visa holders can work an extra 8 hours per fortnight from pre-pandemic levels to provide continuing labour shortage relief.

As partners in your investment journey, we monitor, examine, and navigate change. The Federal Budget is one such factor in our highly considered investment strategy and wealth management process.

This article is one part of our 2023 Budget series. To read more of our Budget commentary, click the links below:

–     Individuals and Families

–     Economic and Fiscal Implications

For more information on our approach to wealth strategy and investment management, please contact us on +613 9655 5000 or contact our experts here.