Federal budget 2023: What small businesses need to know

Key points include; small businesses to benefit from extra tax write-offs for electrification and energy-efficient investments, more than $4 billion allocated to renewable energy investments, the instant asset write-off continues but limits have been tightened, while the ATO will continue a GST crackdown.

$20,000 instant asset write-off

The Temporary Full Expensing and generous instant asset write-off schemes were scheduled to end this year. In a surprise move, the federal government are going to launch a refreshed instant asset write-off scheme for purchases up to $20,000. It may not be around for long, and it will apply for upgrades installed or first used in the 2023–2024 financial year.

Reducing work load

Accountants and tax agents will be authorised to file multiple Single Touch Payroll forms on their clients’ behalf from mid-2024, rather than employers having to complete the process each month.

Small businesses will also be granted up to four years to amend their income tax returns from July 1, 2025. The ATO has also vowed to minimise the use of cheques, resulting in faster and easier tax refunds.

Boost to cash flow for small businesses

In an effort to help small businesses, the federal budget has introduced a new way of calculating the increase of Pay As You Go and GST payments.

The current 12% GDP adjustment factor will change to a new 6% rate, a move designed to improve cash flow for 2.1 million small businesses.

Small business tax compliance

With many billions of debts held by Australian small businesses, in an attempt to whittle away at the tax gap, the ATO will:

• Offer an amnesty on failure-to-lodge penalties for certain late payments going back to late 2019
• Spend $9 million over four years on tax ‘clinics’ to expand access to solid SME taxation advice
• Provide $12.8 million to trial-run an expanded independent review system, allowing medium-sized enterprises to plead their case
   

The supportive measures above refer to SMEs which own up to debts, or actively seek ways to improve their tax compliance. Businesses which deliberately flout the rules should not expect such leniency. The ATO is aiming to improve GST compliance and along with sleuthing, will be granted $588.8 million to identify would-be GST scammers filing tax returns for ‘sales’ which never happen.

Small business innovation

$392 million has been assigned to launch an Industry Growth Program. The initiative will help small businesses and startups commercialise their concepts and expand their operations. Eligible businesses will need to focus on priority areas listed in the National Reconstruction Fund.

Energy price relief

Direct energy bill relief is on the way for as many as one million small businesses, with up to $500 in direct bill support per customer. 

The Small Business Energy Incentive

Small and medium sized businesses which invest in energy-efficient systems i.e., next-generation refrigeration, batteries, or thermal energy storage, will be eligible for bonus tax deductions.

Eligible expenditure is capped at $100,000, the 20% bonus will provide up to $20,000 in deductions. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.

However, certain exclusions will apply, such as:
• electric vehicles
• renewable electricity generation assets
• capital works, and
• assets that are not connected to the electricity grid and use fossil fuels.

Build-to-rent properties: building allowance up, MIT withholding rate down

To increase the supply of housing, for eligible new build-to-rent projects where construction commences after 7:30 PM AEST on 9 May 2023, the Government will:
• increase the rate for the capital works tax deduction (depreciation) to 4% per year
• reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30% to 15%.
 

FBT rules for Electric Vehicles

The Government will sunset the eligibility of plug-in hybrid electric cars from the FBT exemption for eligible electric cars. This change will apply from 1 April 2025. Arrangements involving plug-in hybrid electric cars entered into between 1 July 2022 and 31 March 2025 remain eligible for the Electric Car Discount.

Support for apprenticeships

A new non-financial support model for Australian apprentices will redesign and refocus key support services, budget papers say, “to increase apprenticeship completion rates and the diversity of the apprentice workforce.” 

SME digital resilience

$23.4 million will go towards the Cyber Wardens program, a digital resiliency and cyber-security program launched by the Council of Small Business Organisations Australia (COSBOA). It aims to provide Australia’s first micro-credential for cybersecurity in the SME sector, providing a pathway for small enterprises to shield themselves from growing digital threats.

Expanding access and awareness of government contracts to small businesses

The ‘Buy Australia Plan’ will improve SME access to the big jobs, with $18.1 million over four years from 2023–24. It will help businesses compete for tenders, update the AusTender system, and bolster SME awareness of federal government contracts.

Working hours for student visa holders

The cap on working hours for international student visa holders, which had been abandoned due to COVID-19, will return on July 1, 2023.

However, the cap will permanently lift to 48 hours per fortnight, potentially gifting students an extra day of work compared to pre-pandemic levels. 

 

Here to help

If you have any queries or need help with any of the issues raised by the Federal Budget please contact your local TaxAssist Accountant for expert advice and guidance.

We can file your in-year and year-end returns for you with ATO and provide you with PAYG withholding tax declarations to distribute to your employees at the year-end.

We can advise you regarding all aspects of payroll preparation and compliance, making sure your calculations are correct and that you meet your deadlines and requirements.

TaxAssist Accountants can also assist with:

• Setup and Administration of Self-Managed Super Funds (SMSF)
• Assistance with Lump Sum withdrawals
• Assistance on Property, Shares & Investments inside Superannuation Funds
• Audits on Super Funds
   

The responsibilities faced by employers can be intimidating, but we can guide you through the processes, costs, calculations and deadlines and take care of everything for you. Call us on 1300 513 332 or make an enquiry here.

Date published 10 May 2023 | Last updated 22 May 2023