2023 Federal Budget Highlights

The Federal Treasurer Jim Chalmers handed down the 2023 Federal Budget on 9 May 2023. The following is a list of highlights from a tax and superannuation perspective.

Businesses

• With the Temporary Full Expensing measures ending, small businesses will need to fall back to using the instant asset write-off rules for bringing forward tax deductions for depreciation. The threshold under these for small businesses applying these simplified depreciation rules will be $20,000 for the 2023-24 income year. Also important to note is that if you aggregated turnover is over $10million you will not be eligible for the instant asset write off and will be required to depreciate assets over time.
• An additional 20% deduction will be available for certain small and medium business expenditure supporting electrification and energy efficiency. This would include items such as energy efficient fridges, heat pumps and electric heating or cooling systems and batteries.
• FBT exemption for eligible plug-in hybrid electric cars will end from 1 April 2025. Full electric vehicles will remain exempt from FBT at this stage.

Individuals

• Income support payment base rates will be increased by $40 per fortnight.
• The minimum age for which older people qualify for the higher JobSeeker Payment rate will be reduced from 60 to 55 years.
• CPI indexed Medicare levy low-income threshold amounts have been announced for the 2023-24 income year.
• Eligible lump sum payments in arrears will be exempt from the Medicare levy from 1 July 2024.
• Low and middle income tax offset has not been extended. As a result, low-to-middle income earners may see their tax refunds from July 2023 reduced by between $675 and $1,500 (for incomes up to $90,000 but phasing out up to $126,000), all other things being equal.
• No changes have been announced to the “Stage 3” tax cuts set to commence from 1 July 2024.

Superannuation

• Superannuation tax concessions will be reduced for individuals with total superannuation balances in excess of $3 million from 1 July 2025. There were no further details provided for this from those announced earlier in the year.
• Employers will be required to pay their employees’ superannuation guarantee entitlements at the same time as they pay their salary and wages from 1 July 2026.

Tax administration

• Funding will be provided to address the growth of businesses’ tax and superannuation liabilities including the introduction of an amnesty program. The amnesty will remit failure-to-lodge 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
• Funding will be provided to expand and extend compliance programs for Personal Income Tax, Serious Financial & Organised Crime and GST. Expect to see more review and audit activity undertaken by the ATO.

If you would like to know more information about any of these measures, please do not hesitate to contact our office on 03 9870 1300.