Federal Budget 2023-24
Business forced to dig deep as Budget spending restrained
The 2023-24 Federal Budget, delivered by Treasurer Jim Chalmers is focused on softening the blow of inflation and cost-of-living rises. The mantra was helping people struggling to make ends meet.
For business, that Budgetary restraint could prove frustrating, with only a handful of positive measures, predominantly designed to support energy efficiency. There is an absence of structural reform to support business through the forecast economic tightening. Businesses will need to find their own path and not rely on any Government led change to reshape the Australian economy and mitigate the tougher times ahead.
Access our comprehensive analysis below to understand the impacts of this year’s Federal Budget on individuals and mid-market businesses.
Looking at specific sectors, investment in dwelling construction is expected to contract by 2-3% for the coming three years. Retailers are on notice that household consumption is set to level off with minimal growth in the period 2023-25, and investment by business will also slow considerably over the same period.
Two minor initiatives are offered in this year’s Budget for smaller businesses as initiatives to support small-scale capital investment. The first of these is a temporary increase of the instant asset write-off threshold to $20,000, from 1 July 2023 until 30 June 2024, limited to businesses with aggregated annual turnover of less than $10million. The $20,000 threshold will apply on a per asset basis, so eligible businesses can instantly write off multiple assets.
Fast facts
Surplus
The underlying cash surplus is forecast to be $4.2 billion in 2022-23.
Business investment
Non-mining investment is expected to fall from 4.0% in 2022-23 to 2.5% in 2023-24.
Wage growth
Forecast to increase, with wages rising 4.0% in 2023-24.
Inflation
Forecast to fall from 6.0% in 2022-23 to 3.25% in 2023-24.
Energy
$4 billion will be invested to become a renewable energy superpower.
Tax compliance
Extended tax compliance programs with an additional investment by Government $588.8 million over four years.With no changes to the personal income tax rates, the Government has announced exemptions from the Medicare Levy related to some lump sum payments for low income earners.
The Government has announced additional measures to encourage small businesses to invest in certain assets and to help with cash flow.
Managed Investment Trust (MIT) reforms have been announced to incentivise investment into Australia’s Build-To-Rent (BTR) sector as well as some energy efficient buildings.
The Government will introduce a global minimum tax and domestic minimum tax to ensure large multinationals pay an effective minimum level of tax in each jurisdiction in which they operate.
The foreshadowed tax on superannuation balances exceeding $3million has been confirmed, along with further clarity on other superannuation measures.
From 1 July 2026, employers will be required to pay employees’ superannuation guarantee entitlements more regularly and plug-in hybrid electric vehicles (PHEV) will see a change in FBT eligibility.
The Government will increase the current Road User Charge for heavy vehicles over the next three years, leading to a reduction in fuel tax credit entitlements available to transport operators.
The Government has announced an expansion of the scope of the income tax general anti-avoidance rule and provided additional cash injection over the next four years for the ATO to continue its focus on compliance activities.
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