Highlights of the 2023/24 Federal Budget: Key Takeaways

The Australian Government's 2023/24 Federal Budget marks a pivotal point in the nation's journey toward economic recovery and sustainability. With targeted measures aimed at easing cost-of-living pressures and supporting growth, this budget lays the groundwork for resilience in an uncertain global environment. Below, we break down the key takeaways.

Small Business Support Measures

Instant Asset Write-Off Increased to $20,000

From 1 July 2023 to 30 June 2024, small businesses with an aggregated turnover of less than $10 million can immediately deduct eligible depreciating assets costing less than $20,000. This provides a welcome cash flow benefit for investments in equipment and tools.

Assets valued over $20,000 must be depreciated under existing small business simplified depreciation rules.

Fringe Benefits Tax (FBT) Update for Plug-in Hybrids

From 1 April 2025, plug-in hybrid electric vehicles will no longer be eligible for the FBT exemption under the electric car discount scheme. Businesses should factor this into future vehicle acquisitions.

Small Business Energy Incentive

An additional 20% deduction will be available for eligible assets or upgrades that improve energy efficiency. This bonus deduction will be capped at $20,000, with further eligibility criteria to be announced.

PAYG and GST Instalment Adjustments

The GDP uplift rate used to calculate PAYG and GST instalments will be reduced from 12% to 6% for the 2023–24 income year. This adjustment provides modest cash flow relief.

Lodgement Penalty Amnesty

The ATO is offering a lodgement penalty amnesty for small businesses that lodge outstanding tax returns or activity statements between 1 June and 31 December 2023. It applies to forms originally due between 1 December 2019 and 28 February 2022.

Individual Taxpayer Relief

Medicare Levy Thresholds Increased

To reduce the financial burden on low-income earners, the Medicare levy low-income thresholds for singles, families, seniors, and pensioners have been increased. This change reflects the rising cost of living.

Lump Sum Arrears Exemption

Eligible lump sum payments in arrears (such as back payments of salary or compensation) will be exempt from the Medicare levy, helping to ensure vulnerable taxpayers are not unfairly penalised.

Superannuation Reforms

Pay-Day Super from 1 July 2026

Compulsory super contributions will be required to be paid on the same day as salary and wages. This reform will help employees track and access their super more easily and reduce unpaid super.

Super Tax on High Balances

From 1 July 2025, individuals with total super balances exceeding $3 million will face an additional 15% tax on earnings above that threshold. This brings the effective tax rate on these earnings to 30%, while earnings under $3 million remain taxed at 15% (or 0% in retirement phase).

Other Key Budget Announcements

Workforce Incentives for Pensioners

To address labour shortages, the government will extend a measure allowing age and veteran pensioners to earn more before their pension is reduced. Pensioners can now earn up to $11,800 under the Work Bonus scheme.

Final Thoughts

The 2023/24 Federal Budget strikes a careful balance between supporting growth and fiscal responsibility. Small businesses receive incentives for investment and energy efficiency, individuals benefit from Medicare levy relief, and superannuation reforms aim to improve fairness and transparency in the system.

Navigating these changes requires proactive planning. Dolman Bateman is here to help you interpret what the budget means for your circumstances and take advantage of the opportunities it presents.

Need advice? Contact us today at (02) 9411 5422 or book an appointment now.

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.