The 2023-24 Federal Budget will be released early next month, and little update has been released beyond the super balances above $3 million and the decision not to extend the temporary $1,500 low and middle-income tax offset beyond 30 June 2023. The cost of living is expected to be a focus during the budget announcements, with the government walking a tightrope between easing pressure without increasing inflation.
If there will be a time to tighten budgets in the election cycle, this is the time to do it. The Government will look at concessions provided within the tax system and whether those concessions meet their stated objective and, when it comes to spending, potentially redraw the allocations. Some of the areas to watch include:
- The legislated stage three tax cuts that collapse the 32.5% and 37% tax brackets to a single rate of 30% for those with assessable income between $45,000 and $200,000 are not due to commence until 1 July 2024. The Government committed to keeping the tax cuts during the election and can bypass the issue until the 2024-25 Budget, but we’ll see.
- Provision for announced defence spending.
- Active support to develop a viable, clean energy industry and transition to clean energy.
- Temporary full expensing – the productivity measure designed to encourage business investment that enables a business to fully expense the cost of depreciable assets in the first year of use, which is set to expire on 30 June 2023. The Government will either extend or redevelop the small business instant asset write-off or remove the concession altogether.
- Technology and training boosts. In the 2022-23 Federal Budget, the former Government announced that it would provide certain business taxpayers with ‘bonus’ tax deductions for investing in employee training or improving digital operations. The Skills and Training Boost allows small businesses (aggregated turnover less than $50 million) to claim a 120% deduction for eligible expenditure incurred on external training for employees between 29 March 2022 and 30 June 2024. The Technology Investment Boost provides a 120% deduction for eligible expenses that are incurred for the purposes of improving digital operations or digitising business operations. This can include the cost of depreciating assets. The boost is aimed at costs incurred between 29 March 2022 and 30 June 2023 and is limited to a maximum bonus deduction of $20,000. But, the legislation enabling both boosts has not passed Parliament. There is an opportunity in the Budget to extend the scope and nature of the concession.
The 2023-24 Federal Budget will be released on Tuesday, May 9 2023. Keep your eyes peeled for our updates regarding the impacts it will have on you, your superannuation and your business. If you have any questions before this date, please contact our team at support@walkerhill.com.au.
