The May Federal Budget, set to deliver a $9.3bn surplus for this financial year, has again focused on cost-of-living relief. It promises to extend energy rebates, implement stage three tax cuts and provide assistance to vulnerable Australians, whilst aiming to ease inflationary pressures.
Specifically, the government will spend $3.5bn on household energy bill relief, $1.9bn on Commonwealth Rent Assistance, $6.2bn in specific housing initiatives, and $22.7bn in its
“Future made in Australia” package to facilitate private sector investment.
Despite global inflationary pressures, the government is more optimistic than the RBA in the prospect that inflation will reduce to 3% as early as the end of this year.
Pleasingly, all Australian taxpayers should benefit from the income tax rate changes as follows:
- reduce the 19 per cent tax rate to 16 per cent
- reduce the 32.5 per cent tax rate to 30 per cent
- increase the income threshold above which the 37 per cent tax rate applies from $120,000 to $135,000
- increase the income threshold above which the 45 per cent tax rate applies from $180,000 to $190,000.
Small and medium business (SME) support
At F&Co we would like to have seen more done for SMEs, however are pleased to see a continued spotlight on supporting SMEs with increased focus on improving cashflow and access to dispute remediation and support.
Below are some of the key support measures for SMEs announced last night:
Extension to the $20,000 instant asset write-off
This will allow Australian businesses with less than $10m annual turnover to claim an immediate tax deduction for asset purchases up to the value of $20,000.
Energy bill relief
The power bill relief for households will extend to small businesses with approx. one million small businesses to receive a relief of $325.
Small Business Debt Helpline
A commitment of $10.8m over two years from 2024-25 to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners program. This funding will provide small businesses with further support including confidential financial counselling and mental health services.
Future Made in Australia innovation fund
The government is proposing to introduce the Future Made in Australia Act and establish a National Interest Framework to identify priority industries that will guide an earmarked investment of $22.7bn.
The goal of the program is similar to the US Inflation Reduction Act and international initiatives in a bid to incentivise advanced manufacturing and clean energy projects within Australia.
Whilst this investment may benefit larger businesses the plan includes a $1.7 billion innovation fund that should benefit SMEs and start-ups further down the line.
Homes for Australia plan
A further $6.2bn investment in new housing proposed by the government’s Homes for Australia plan will help construction and trades businesses to grow, offering a prospective pipeline of new work for years to come.
The additional investment builds on the more than $25bn in new housing investments set to be delivered over the next decade.
Retaining Business Activity Statement (BAS) refunds
To combat fraud, the government is extending the time the ATO has to notify a business if it intends to retain a BAS refund for further investigation from 14 days to 30 days, which will align with non-BAS refunds. Legitimate refunds will be largely unaffected.
Any legitimate refunds retained for over 14 days would result in the ATO paying interest to the taxpayer. The ATO will publish BAS processing times online. This change will have effect from the start of the first income year after Royal Assent of the enabling legislation.
Support from Fair Work
To help SMEs comply with recent workplace relations changes, $20.5m has been allocated to the Fair Work Ombudsman, spread over four years.
Dispute resolution and franchisee support
A provision of $2.6m over four years, from 2024-25, and $700,000 per year on an ongoing basis has been allocated to the Australian Small Business and Family Enterprise Ombudsman to help businesses without legal representation to access alternative dispute resolution services.
The government has committed $3m over two years to implement its response to the recent review of the Franchising Code of Conduct.
Defence industry grants
A commitment of $183.8 million will go towards defence industry grants to support SMEs. Including a new Defence Industry Development Grant Program, the government says it will “reduce the administration burden on small and medium businesses and provide greater opportunities for tailored financial support”.
Digital identity scheme
A further $288 million will be invested in the government’s digital identity scheme bringing its total funding to nearly $1 billion. Once operational the government believes the program will “lower the administrative burden on small businesses by reducing the amount of ID data they need to store and protect for their customers and their employees”.
Supporting paid parental leave
As already heralded, Services Australia will receive $10m to help small businesses administer the expanded paid parental leave scheme.
How Falanga & Co can help
We are pleased to see further targeted measures again with this Federal Budget which directly support SMEs who continue to face the challenges of rising input costs and ongoing interest rate and wage pressure.
As always, 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 with your F&Co accountant today.
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