Australian Federal Budget: 2023-2024

Overview

Treasurer Jim Chalmers delivered his second budget for the Labor Government overnight, less than 8 months on from his first budget delivered after the change of government. The RBA cash rate was 2.60% back then and has risen a further 1.25% to the current 3.85%, with the end hopefully in sight for homeowners. The Treasurer’s second budget is heavily targeted at addressing the rising cost of living and boosting welfare, all while still aiming for balance, trying to avoid contributing to inflationary pressures, and to continue to foster economic growth and a return to real wage growth for the Australian public.

Budget 2023-24: Stronger foundations for a better future

The five pillars outlined within the budget overview were:
• delivering cost-of-living relief
• strengthening Medicare
• investing in a stronger and more secure economy
• broadening opportunity
• strengthening the Budget and funding our priorities.

Broadly, some of the big winners and losers from the budget:

Winners

• Single parents
• Low-income households
• Medicare access for children <16 years, pensioners and other concession holders
• Small businesses
• Aged care workers
• First home buyers
• Renters
• Build-to-rent construction sector
• Skilled migrants and businesses reliant on them

Losers

• Businesses who attempt to dodge superannuation guarantee liabilities
• Tax-dodgers
• Government consultants
• High-balance superannuation members
• Big gas companies

Headlines & key comments from ABC post-budget review:

1. This is the first budget surplus in 15 years and a $40bn turnaround from October 2022 forecasts;
2. The budget includes an allocated spending of $15bn on cost-of-living relief measures over a five year period
3. Questions have been made around the mid-term forecasts – how will the government pay this over the mid-long term?
4. Critics have questioned whether Labor have been too lenient and that more courage is needed than simply slugging gas companies and taxing smokers
5. Jim Chalmers has said that the budget has been “carefully calibrated” to not further stoke the fires of inflation
6. $3.5bn to be spent over 5 years for Medicare, with increased access to bulk billing for children under 16 years, pensioners and other Commonwealth concession holders.

Tax & Accounting – The measures that matter

Tax incentives for build-to-rent housing

• An increase to the capital works tax deduction from 2.5% to 4.0% per annum
• Reduction to the withholding tax rate from 30% to 15% for eligible fund payments to foreign residents from eligible managed funds

$20,000 instant asset write-off for 2023-24 income year

• The instant asset write-off threshold has been temporarily increased from $1,000 to $20,000 for the 2023-24 financial year.
• Small businesses, with aggregated annual turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

International tax measures

• Implementation of a 15% global minimum tax rate for large multinational enterprise.
• Implementation of a 15% domestic minimum tax.

Small Business Energy Incentive

• Incentives introduced to provide eligible small businesses with bonus tax deductions to support clean energy initiatives.
• This will apply on eligible assets or upgrades first used or ready to use between 1 July 2023 and 30 June 2024.

Increase to Heavy Vehicle Road User Charge

• The Heavy Vehicle Road User Charge will increase from 27.2c to 32.4 by 30 June 2026, increasing by 0.6c per annum.

Superannuation

• Employers will be required to pay their superannuation guarantee obligations on the same day of the underlying salary or wages from 1 July 2026.
• Future earnings on superannuation balances greater than $3 million will be subject to an additional 15% tax.

Compliance measures

• Expansion of Part IVA anti-avoidance measures from 1 July 2024.
• Additional funding for the ATO in respect of GST compliance and personal income tax compliance activities.
• Lowering of tax administration burden for small businesses with aggregated turnover of less than $10m, one of which being the waiving of late lodgement penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due during the period from 1 December 2019 to 29 February 2022.

If you have any questions, please get in touch with our team at WMS.