The Australian Federal Budget was handed down Tuesday, 9th May 2023, by the Treasurer Dr Jim Chalmers
Measures include (some had been previously announced):
- As expected, there was no change to tax scales in the budget.
- From July 2023, up to $500 in electricity bill relief for eligible households and up to $650 for eligible small businesses, in a scheme which involves state cooperation.
- Quarterly tax instalments for small businesses for GST and income tax in 2023–24 will increase by 6% instead of 12%
- From 1 July 2025, small businesses will be permitted up to 4 years to amend their income tax returns.
- For the 2023-24 year a 20% tax deduction for eligible assets supporting electrification and more efficient use of energy, is to be available to businesses with a turnover of less than $50 million
- Current unlimited instant asset write off for businesses with turnover under $50 million is being restricted to $20,000 (per asset) for businesses with turnover under $10 million, in the period 1 July 2023 to 30 June 2024. Small business pooling rules can be reapplied for assets in excess of $20,000 (i.e. allowing depreciation of 15% first year and 30% thereafter). See notes on depreciation.
- Incentives for build to rent projects through an increase of the capital works tax deduction (Div 43) rate from 2.5% to 4% per year (where construction commences after 9 May 2023). For more information about build to rent projects in Australia see here and here.
- Small Business Tax and Bas return late lodgment amnesty: Lodgment penalties for businesses with aggregate turnover of less than $10 million will be remitted for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due in the period 1 December 2019 to 29 February 2022.
- The final withholding tax rate for MIT investments will be reduced from 30% to 15%.
- Tax deductions for offshore gas producers will be capped, and they will be subject to more stringent tax compliance measures.
- Starting July 1, 2025, a higher tax rate of 30% will apply to earnings on the excess of superannuation balances over $3 million. Balances below $3 million will still be taxed at the concessional rate of 15%.
- Super fund non-arm’s length income (NALI) to be capped at twice general expense and will exempt large APRA funds as well as expenditure that occurred prior to 2018-19. See Treasury draft legislation and accompanying info.
- A range of welfare measures were confirmed, including adjustments to Medicare support, pharmaceuticals and job seeker and similar allowances. See Centrelink payment rates
- Confirmed: the removal of the ParentsNext program and the extension of the single parenting payment until the youngest child reaches the age of 14.
- Under the changes to the Petroleum Rent Resource Tax (PRRT) the proportion of PRRT assessable income that can be offset by deductions will be limited to 90%. See media release.
- From 1 July 2024 eligible lump sum payments in arrears will be excluded from the Medicare levy.
- As has been customary in the budget, the Medicare Low Income thresholds have been inflation adjusted (taking effect from 1 July 2022).
- the eligibility of plug-in hybrid electric cars for the fringe benefits tax exemption for eligible electric cars will be removed from 1 April 2025
References & additional info:
- Government Budget website (budget papers): budget.gov.au
- Budget paper No. 2
- 2023 Federal Budget Report – BDO
- Federal Budget | Tax Analysis and insights 2023-24 – PWC
- Federal Budget 2023-24 Summary of tax and superannuation measures – CPA Australia
- Federal Budget 2023/24 – Grant Thornton
- Services Australia (Centrelink) – Budget measures affecting payments
- Budget 2023 – What’s in it for older Australians? – Retirement Essentials Blog
- Support overseas businesses expanding into Australia – Austrade
Small Business Energy Incentive
From 1 July 2023 a “bonus tax deduction” will be available of up to $20,000 on maximum expenditure of $100,000 (so 20% of the eligible expenditure) on the cost of electrification and the more efficient use of energy.
The measure will be included in the Federal Budget being released on 9th May, 2023.
Examples reference in the Treasurer’s media release include the electrification of heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps.
- the measure will apply to eligible assets or upgrades..
- first used or installed ready for use between 1 July 2023 and 30 June 2024.
- the measure is available to businesses with annual turnover of less than $50 million
Chalmers confirms millions to receive up to $500 in energy rebates in Tuesday budget
The treasurer, Jim Chalmers, has promised hundreds of dollars of energy rebates to 5.5m households as part of cost-of-living relief which will apply “to more than one age cohort”.
This page was last modified 2023-05-11