Small businesses are the backbone of the Australian economy, employing over 6 million people and contributing significantly to the country’s GDP.
Every year, the federal government releases a budget that outlines the financial plan for the country.
In this article, we will be discussing the Australian Federal Budget 2023 and the must-know small business taxation and business changes that will impact businesses Australia wide.
Introduction to the budget
The Australian federal budget is released annually and provides a financial plan for the country.
It outlines the government’s revenue and expenditure for the upcoming financial year.
This article will focus on the Australian Federal Budget 2023 and its impact on small businesses.
Overview of the Australian Federal Budget 2023
The Australian Federal Budget 2023 has several changes that will impact small businesses.
The budget focuses on economic recovery and growth by providing funding for infrastructure, innovation, and job creation.
The budget also addresses climate change and healthcare, but for small businesses, the key changes are related to taxation and business incentives.
The 2023-2024 government budget includes energy price relief, a surprise immediate asset write-off scheme revival, and a $392 million programme to commercialise small business inventions.
Here are the Albanese government’s first “full” budget’s important policies and revisions for SMEs.
Before the budget, one million small businesses were promised direct energy bill relief.
Targeted energy bill assistance to qualified homes and small businesses will get $1.5 billion over two years.
Treasurer Jim Chalmers says payments will support customer bills up to $500.
Energy-efficient technologies including next-generation refrigeration, batteries, and thermal energy storage will earn small and medium businesses extra tax deductions.
The 20% incentive can deduct up to $20,000 with eligible spending maximum at $100,000.
Another pre-budget initiative, it remains a key part of the Albanese government’s SME support strategy.
$20,000 quick asset write-off
Small firms and industry associations have long anticipated the termination of Temporary Full Expensing and generous immediate asset write-off schemes this year will hinder investment plans.
The federal government will revive the quick asset write-off for purchases up to $20,000.
It only applies to 2023–2024 upgrades.
The federal budget changes Pay As You Go and GST payment calculations to protect small firms with low margins. 2.1 million small enterprises will benefit from a 6% GDP adjustment factor, halving the current 12% rate.
Supposedly, time is money. Instead than fussing with taxes, the federal budget will offer small business owners more time to operate their businesses.
From mid-2024, accountants and tax agents will be able to file several Single Touch Payroll forms for their customers.
“Reducing the burden of making revisions,” small firms will have four years to alter their income tax returns starting July 1, 2025.
Boosting small business tax compliance
Many billions of dollars in debts are also staring the ATO in the face from Australian small and medium-sized businesses.
In order to reduce the tax gap and collect responses from creditors, It will:
- Offer amnesty on failure-to-lodge fines for late payments from late 2019.
- Spend $9 million over four years on tax “clinics” to provide access to good SME tax guidance.
- Provide $12.8 million to trial an enlarged independent review mechanism that lets medium-sized firms argue their case. Enforcing tax laws
- Businesses breaking the law shouldn’t expect mercy. In addition to old-fashioned investigation, the ATO will receive $588.8 million over four years to boost GST compliance among firms. That’s mostly due to the big wave of GST scammers filing tax returns for “sales” that never happened. Small businesses, especially those in the construction industry, that are relying on shady cash related projects should ensure they move quickly to compliance.
Small business innovation $392 million
The $392 million for the Industry Growth Programme in the 2023-2024 government budget is striking.
The project would help startups and small enterprises commercialise and expand.
Businesses must prioritise National Reconstruction Fund priorities.
$54.3 million over five years will fund “a new non-financial support model” for Australian apprentices.
Budget papers suggest the change will “redesign and refocus key support services to increase apprenticeship completion rates and the diversity of the apprentice workforce.”
Considering Australia’s skills deficits. Details will follow.
Apprenticeship gender diversity
Given the gender inequality in many key industries, $5 million in grant funding will go to workplace inclusion NGOs.
“This will include providing education, advice or support to increase culturally safe and inclusive workplaces, reduce cultural barriers to women’s participation, address workplace challenges and support businesses to attract and retain women,” the budget papers said.
Cyberwardens for SME digital resilience
COSBOA’s Cyber Wardens digital resiliency and cybersecurity programme will get $23.4 million.
It seeks to give Australia’s first cybersecurity micro-credential for SMEs to protect them from digital attacks.
COSBOA, which has long sought federal assistance for this effort, also benefits.
Expanding small business government contract access and awareness
Small firms in Australia regularly miss out on lucrative government contracts due to opaque and biased application processes.
The federal government claims its cheery “Buy Australia Plan” would help SMEs get huge jobs.
From 2023 to 2024, $18.1 million will help firms compete for tenders, update AusTender, and raise SME awareness of federal government contracts.
Student visa work hours
On July 1, 2023, the international student visa cap on working hours will reappear.
However, the cap will permanently increase to 48 hours per week, allowing students to work an extra day compared to pre-pandemic levels.
Need help understanding the budget? Contact Pherrus
The newly proposed federal budget doesn’t have to be difficult to understand.
We are able to assist in making sense of it for your company.
Get in touch with Pherrus, the industry leader in business accounting, right now to find out more about how these shifts will influence the way your business runs.
Pherrus – The Best in Business Accounting.