There were very few tax changes freshly announced in the budget. These days budget announcements are so light on detail, with clarification and certainty through legislation so delayed, that in many cases not much insight can be gained or clear action to be taken.

Stage Three Tax Cuts – Still on The Cards: The budget did not make any changes to personal tax rates for 2023/24. Treasurer Chalmers continues to respond to speculation about the stage three tax cuts by declaring they are legislated to proceed as scheduled on 1^st July 2024. One can’t help getting the impression that Albo & Co are waiting until the political climate becomes right to break their election promise on this. 

Here is a comparison of rates and income thresholds before and after the tax cuts. 

TIP: Assuming the tax cuts prevail, they are getting close, with just over a year before they kick in. That means planning opportunities that push taxable income from 2023/24 to 2024/25 should be considered.

Small Business – Lodgement Penalty Amnesty Program: Following a lesser-known announcement in the recent 2023/24 Federal Budget the ATO have formalised an amnesty on some penalties for overdue tax forms. The amnesty applies to overdue income tax returns, BAS and FBT returns that were due between 01/12/2019 and 28/02/2022.  The amnesty runs from 01/06/2023 to 31/12/2023. It is only available to businesses with annual turnover of $10m or less and which are not part of privately owned group controlling over $5 million of net wealth. This is the tail end of COVID niceties from the ATO. 

TIP: This is not as generous as it might first appear. It only applies to late lodgement or failure to lodge penalties and not to other penalties including interest. It does not appear to have any relevance to SGC superannuation requirements. This is the ATO attempting to quantify the amount of tax debt they can potentially chase post COVID. If you are behind in the relevant lodgements, this is some incentive to bring everything up to date. It is better to seek early advice if you need to manage debts to the ATO.

WARNING: Obligations to the ATO in relation to PAYG Withholding, Superannuation Guarantee, GST, LCT (Luxury Car Tax) or WET (Wine Equalisation Tax) can be subject to Director Penalty Notices (DPN) which can crystalise personal liability for company directors. 

More information: Small businesses given unique opportunity to get back on track with tax | Australian Taxation Office (ato.gov.au)

PAYG and GST Instalment Uplift Factor: The GDP uplift factor applying to PAYG and GST instalments for 2023/24 was reduced to 6% (instead of the 12% that would have applied under the relevant statutory formula).

Temporary Full Expensing (the big COVID write-off) Finally Ends 30 June: The depreciation write-off allowing businesses with turnovers under $5 Billion, full write off of virtually any depreciating asset up to unlimited value ends on 30 June 2023. The system was to return to the old Instant Asset Write Off available to businesses with annual turnover <$10m, allowing immediate write off of assets up to a value of $1,000 only. The 2023/24 Budget announced that the Instant Asset Write Off limit would be increased to $20,000 until 30^th June 2024. 

WARNING: It is important to remember that to validly claim under the expiring Temporary Full Expensing measures the asset has to be in use or installed ready for use by 30^th June 2023.

More information: Temporary full expensing | Australian Taxation Office (ato.gov.au)

Small Business Support – $20,000 instant asset write-off | Australian Taxation Office (ato.gov.au)

Deduction Boosts for Small Businesses: Deduction boosts are all the rage now, starting with the Morrison government 2022/23 budget 20% Training and Technology Boosts. The 2023/24 Budget added the 20% Small Business Energy Incentive (Boost). Key details are below:

COMMENT: If you need an example of the real regard the government has for small business just look at how they have handled this. They continue to throw out a few crumbs to tick some feel-good boxes with brief announcements, and then leave it until 1^st June this year to introduce draft legislation which was only finalised on 23 June 2023. Businesses have been pretty much left in the dark, having to guess the detail and implement systems to catch what they imagine might be applicable expenditure. 

TIP: In contrast to write offs that simply put off the payment of tax, boost style deductions like this give you an overall tax saving. We suggest reviewing relevant expense and asset accounts to highlight any expenditure you think might qualify. This is especially important where such classifications may not be obvious to us as part of our ledger review.