The May Federal Budget delivers on repeated promises to address the rising cost of living in Australia. Cost of living measures total $14.6 billion and will see targeted relief for those who need it most.
Specifically, $1.5 billion has been earmarked for household energy bill relief, $3.5 billion for Medicare bulk billing incentives, and $4.9 billion for an increase in welfare payments including Jobseeker and Rent Assistance by 15%. An additional $11.3 billion has also been provided for a 15% award pay increase for aged care workers.
For SMEs, we are pleased to see several important measures which should benefit cashflow and improve operational and compliance efficiencies.
Direct Energy Price Relief
With electricity prices expected to rise by 10 per cent in 2023-24, the Federal Government in partnership with state and territory governments has earmarked $3 billion for targeted bill relief. This will benefit both households and small business over the next two years who will receive up to $500 and $650 respectively to combat rising energy costs.
Additional household relief has also been announced via the establishment of a billion-dollar Household Energy Upgrades Fund which will see more than 110,000 low-interest loans created for energy-saving home upgrades.
Small Business Energy Incentive
While the $650 energy bill discount is a one-off support measure, businesses with annual turnover of less than $50 million will also be eligible for an energy incentive designed to encourage electrification and energy efficiency. SMEs can claim 20% of expenditures that promote electrification or efficient energy use, which includes electrified heating/cooling systems, energy-efficient appliances, induction cooktops, and installations of batteries and heat pumps.
The ‘Energy Incentive’ allows a maximum claim of $20,000, which means up to $100,000 worth of spending will be eligible for the incentive. This measure is set to benefit up to 3.8 million SMEs, costing the government $314 million over the next four years.
Importantly, eligible assets or upgrades must be first used or installed for use between 1 July 2023 and 30 June 2024.
Continued Instant Asset Write-Off
SMEs with annual turnover of less than $10 million will benefit from a one-year extension of the instant asset write-off. As such, business owners will still be able to immediately deduct the full costs of eligible assets with a value of less than $20,000, so long as those purchases are installed and ready for use between July 1, 2023, and June 30, 2024.
Changes to PAYG
The Government will amend the GDP adjustment factor for PAYG and GST instalments at 6% for the 2024 income year, this is a reduction from 12% under the statutory formula. The reduced factor will help small businesses with their cashflow.
Lodgement Penalty Amnesty
A lodgement penalty amnesty for SMEs with turnover of less than $10 million has also been announced. This means the ATO will not apply failure-to-lodge penalties against any outstanding tax statements lodged between 1 June 2023 and 31 December 2023, which were originally due to be lodged between 1 December 2019 and 29 February 2022.
Reduced Red Tape
Businesses with turnover between $10 million and $50 million will now be able to make use of the ATO’s independent review process when subject to an audit which was previously capped at businesses with a turnover of $10 million.
Additionally, small businesses can now also authorise their tax agent to lodge multiple Single Touch Payroll forms on their behalf. Should you require any assistance or information on this, please reach out to us.
GST Compliance
The Government had doubled down on tax compliance and evasion, providing the ATO with an additional $588.8 million in funding for four years to promote GST compliance. This funding will see the ATO increase its scrutiny of businesses, ensuring they are accurately reporting GST as part of tax obligations.
Cyber Security
The Government has also announced a $23.4 million program which will help to protect small businesses against cyber threats. The program will help SMEs train in-house cyber wardens and will be delivered by the Council of Small Business Organisations Australia.
Industry Growth & Fostering Innovation
To support innovation, the Budget allocates $392 million to the Industry Growth Program, aimed at helping small businesses and startups commercialise their ideas and expand operations.
These measures, along with others such as the ‘Buy Australia Plan’ for increased access to government contracts, are geared towards empowering Australian SMEs.
Enhancing Apprenticeship Support & Promoting Gender Diversity
A total of $54.3 million will revamp support services for apprentices, aiming to boost completion rates and workforce diversity. Additionally, $5 million in grant funding will go towards promoting more inclusive workplaces.
How Falanga & Co can help
We are pleased to see targeted measures in this Federal Budget which directly support SMEs who are facing multiple headwinds including rising input costs, interest rates and wage pressures.
It’s important to note however that much of this support is only temporary, and businesses should therefore continue to be prudent and take a long-term view.
If you are unclear or unsure about how the recent measures in the Federal Budget might affect you, then please get in touch today.
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