Like a Macca's cappuccino that's more froth and bubble than coffee, we welcome you to this years Labor budget where there was some tinkering around the edges to try to help with cost of living pressures whilst not poking the inflation bear. Here are the lowlights 😉
💲Temporary $20,000 instant asset write-off threshold. The temporary full expensing measures are over, boohoo 😢 and from 1 July 2023 the instant asset write-off threshold will be $20,000 up to 30 June 2024. So what does that mean? Get in quick to make any asset purchases >$20,000 before 30 June 2023 (and remember it needs to be in your hot little hand) so the asset can be immediately written off rather than depreciated over the life of the asset. Check out our tax planning blog for more info on this one.
💲Managing tax instalments. Ah yes the dreaded Pay as You Go Instalments (PAYGI)🤦♀️. The uplift factor for pay as you go (PAYG) and GST instalments will be 6% for the 2023–24 income year. This is a reduction from 12%. This rate will apply to small biz and taxpayers with an aggregated turnover up to $10 million for GST instalments and $50 million for PAYG instalments. Heads up this is just a timing benefit, as the same amount of tax will still be payable, it's just when you have to pay it. No idea what PAYGI are? Check out our blog for more.
💲Small Biz Energy incentive You will be able to claim an additional deduction of 20% on the cost of eligible depreciating assets up to $100,000 (ie, a max claim of $20k) that support electrification and more efficient use of energy. These include energy efficient fridges, heat pumps and electric heating or cooling systems per biz (if they have an aggregated turnover of <$50 million) from 1 July 2023 to 30 June 2024 (once again it has to be in your hot little hand, ie, installed and ready for use). There will be some exclusions such as electric vehicles (watch this space for a blog soon to be released on this one), renewable electricity generation assets, capital works, and assets that are not connected to the electricity grid and use fossil fuels. More details to come.
💲 Extension to amendment of income tax returns with the ATO for small biz from 2 to 4 years. This is being sprouted as being a reduction to the admin burden, but to be honest it just means you have to behave for longer, haha 😉 which we know of course all our clients are doing so nothing to worry about.
💲Increasing payment frequency of superannuation guarantee (SG) ... now this is a biggie. From 1 July 2026 employers will need to pay SG on the same day they pay salaries and wages. Currently you have 28 days from the end of the quarter to pay. We do consider this a step in the right direction for all parties as it will help to smooth out cashflow (rather than a lump sum every quarter for biz) and will also help employees have greater oversight over their super. There is plenty of time to plan ahead and software providers will do the heavy lifting for us on this one so don't panic.
💲Increased tax on superannuation balances >$3 million. Yep this one was pre-announced so the venting could happen pre budget delivery night. An additional 15% tax on earnings on an individual’s superannuation account, for total superannuation balances (TSB) exceeding $3 million. This will bring the rate of tax to 30%. Earnings for assets under the $3 million threshold will be taxed at 15%, or 0% if held in a retirement pension account.
💲Increasing the medicare levy low-income thresholds a teeny tiny win for singles, families, and
seniors and pensioners from 1 July 2022 with the medicare levy low-income thresholds increasing to:
• singles — from $23,365 to $24,276;
• families — from $39,402 to $40,939;
• single seniors and pensioners — from $36,925 to $38,365; and
• for family seniors and pensioners — from $51,401 to $53,406.
For each dependent child or student, the family income thresholds will increase by $3,760
The medicare levy is currently 2%.
💲The ATO is getting cashed up yep you heard that right, so what does that mean? More audit activity, and with their data matching capability only increasing if you don't have audit insurance NOW is the time to get it, seriously, don't live dangerously on this one as you will have regret. If you don't have audit cover yet you can click here to obtain or get a quote. There will also be funding provided from 1 July 2023 to enable the ATO to engage more effectively with biz to address the growth of tax and super debts (which went gangbusters over Covid BTW) so if you have debts that are older than 2 years with the ATO or >$100,000 you will most definitely be getting a knock knock on your door from the taxman-ian devil.
💲Lodgement penalty amnesty program for small biz <$10million, which will remit penalties for outstanding tax statements lodged during 1 June 2023 to 31 December 2023 for the periods related to 1 December 2019 to 29 February 2022 so get onto that one if you have outstanding lodgements with the ATO.
There is deafening silence on the small biz tech investment and training boosts paraded in the 2022 budget so I think we can safely assume that one's a dead duck and not rely on that one with any tax planning for this year.
And as always none of the above measures are law until they have passed both houses of parliament and received Royal Assent.
Well that is as good as it nets, haha. If you have any questions about the budget then feel free to contact our super cool not nerdy at all team who can help you. Have a great day and Calc-u-later!
Disclaimer: This blog is for general informational purposes only. For advice on your specific situation, please contact a tax professional, ie us 😊