Last night the Labor Government handed down the 2023-24 Budget, detailing the Government’s plan to deliver targeted cost-of-living relief, investment in Government services and alleviating inflationary pressures.
We have outlined below some of the relevant announcements that were made:
Tax
Increase in the Medicare Levy exemption thresholds
The income limits when the Medicare Levy applies will be increased effective for the 2022-23 financial year.
Medicare Levy thresholds
Single – From $23,365 to $24,276
Single eligible for SAPTO - From $36,925 to $38,365
Family – From $39,402 to $40,939
Couple eligible for SAPTO – From $51,401 to $53,406
Additional threshold for each dependent child – From $3,619 to $3,760
Amendment to the Electric Car Discount
On 12 December 2022, the Treasury Laws Amendment (Electric Car Discount) Bill 2022 was enacted to provide an FBT exemption in respect of eligible electric vehicles. As originally legislated, the eligibility of plug-in hybrid electric cars from the fringe benefits tax exemption will cease for these vehicles where they are provided on or after 1 April 2025. Arrangements involving plug-in hybrid electric cars entered into between 1 July 2022 and 31 March 2025 remain eligible for the Electric Car Discount. The FBT exemption will continue to apply to battery electric vehicles and hydrogen fuel cell electric vehicles.
Small Business
Small Business Support – $20,000 instant asset write-off
From 1 July 2023 until 30 June 2024, eligible small businesses with aggregated turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000.
The $20,000 threshold will apply on a per asset basis so that eligible small businesses can claim a full tax deduction for multiple assets.
Assets valued at $20,000 or more, which cannot be immediately deducted, can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year after that.
Small Business Energy Incentive
Small and medium businesses will be incentivised to save on energy bills through the electrification of assets and improvement to energy efficiency. Business with aggregated annual turnover of less than $50 million, will be able to deduct an additional 20% of the cost of eligible depreciating assets that support electrification and more efficient use of energy.
Up to $100,000 of total expenditure will be eligible for the Small Business Energy Incentive, with the maximum bonus deduction being $20,000.
Full details of eligibility criteria will be finalised in consultation with stakeholders. Eligible assets will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024. Certain exclusions will apply to depreciating assets such as electric vehicles, renewable electricity generation assets, capital works, and assets that are not connected to the electricity grid and use fossil fuels.
Small Business - Lodgement penalty amnesty program
A lodgement penalty amnesty will apply for eligible small businesses with aggregated turnover of less than $10 million to re-engage with the tax system and get their tax obligations up to date. The amnesty applies to tax obligations, including income tax and business activity statements, that were originally due from 1 December 2019 and 28 February 2022.
If those overdue returns are lodged between 1 June 2023 and 31 December 2023, any failure to lodge penalty applying to the late lodgement will be automatically remitted. No action is required to request a remission.
Superannuation
Tax concession reduction on super balances over $3 million
As previously announced, the Government has proposed that from 1 July 2025, earnings on an individual’s total super balance (TSB) of more than $3 million (not proposed to be indexed) will attract an additional 15% tax.
Once earnings are calculated, only those attributed to balances over $3 million will be subject to the additional tax. Any negative earnings calculated can be carried forward indefinitely and offset against future earnings.
Aligning timing of Superannuation Guarantee payments to payday
Effective 1 July 2026, Superannuation Guarantee (SG) payments made by employers will be required to be paid on the day salaries and wages are paid.
The 1 July 2026 commencement date will allow time for the ATO, payroll service providers and superannuation funds to make necessary system changes and for employers to adjust their cash flow practices. Rules regarding the SG charge for late super payments will also be amended to align with the increased payment frequency.
Amendment of non-arm’s length income provisions related to the expenditure incurred by super funds
The following amendments are proposed to non-arm’s length income (NALI) provisions with regard to expenditure incurred by super funds:
SMSF and small APRA regulated fund income, that is currently taxable as NALI will be limited to twice the level of general expense. The fund income taxable as NALI will exclude contributions;
Large APRA funds will be exempted from NALI for both general and specific expenses of the fund; and
Expenditure that occurred prior to 2018-19 income year will be exempted.
Social Security
Increasing working age and student payment rates
The Government has proposed from 20 September 2023 to increase the following payments by $40 per fortnight:
JobSeeker payment;
Youth Allowance;
Parenting Payment (Partnered);
Austudy and ABSTUDY;
Disability Support Pension (Youth);
Special Benefit; and
Farm Household Allowance
Increasing Rent Assistance Payment Rate
To help address the current rental affordability challenges, the Government is proposing to increase the maximum rate of Rent Assistance by 15% from 20 September 2023.
Electricity Bill Relief
The Government has proposed to provide electricity bill relief from 1 July 2023 until 30 June 2024 of up to $500 to eligible households and up to $650 for eligible businesses.
Eligible individuals include those who hold or receive:
Pensioner Concession Card
Health Care Card (including the Low-Income Health Care Card)
Commonwealth Seniors Health Card
DVA Gold Card
Carer Allowance
States and territory governments, along with energy retailers, will deliver the rebate to eligible individuals through a reduction in their energy bills.
We trust this information is a useful resource for you and your business. If you have any questions about the Budget, please email info@vatcpa.com.au or call on (03) 9584 2277.