What the 2023–24 Federal Budget means for small businesses

By Zilla Efrat 

While SMEs were not on the sideline in this year’s Federal Budget, nor were they in the spotlight.

That’s the word from the Council of Small Business Organisations Australia. It says the budget acknowledges small businesses, “but there is a need for greater focus on empowering them, promoting entrepreneurship and providing enhanced reasons to commence and remain in business”.

While heavily focused on providing cost-of-living relief to vulnerable Australians, the budget also included some measures to lighten the cost of doing business burden and ease the cash flow of SMEs. Here’s a look at some of them.

Combating surging energy costs

There was some relief for SMEs suffering from rising electricity prices in Australia. Treasurer Jim Chalmers unveiled the Small Business Energy Incentive, aimed at helping up to 3.8 million SMEs save on their energy bills.

SMEs with an annual turnover of less than $50 million will get an additional 20 per cent tax deduction on spending that supports electrification and more efficient use of energy.

Up to $100,000 of their spending will be eligible for this tax incentive. Although the benefit is capped at $20,000 per SME, it will help them take steps to, say, electrify their heating and cooling systems, upgrade to more efficient fridges and induction cooktops, or install batteries and heat pumps.

That said, eligible assets or upgrades must be first used or installed ready for use in the 2023–24 financial year.

Elsewhere, the government said it had joined forces with state and territory governments to provide up to $650 in electricity bill relief to eligible small businesses from July 1 via what it’s called the Energy Bill Relief Fund.

Tax and cash flow

Surprisingly, the government temporarily increased the instant asset write-off threshold to $20,000 in 2023–24. As a result, SMEs with an aggregated annual turnover of less than $10 million can immediately deduct eligible depreciating assets that cost less than $20,000.

Before the change, any asset they purchased worth more than $1,000 would have had to have been depreciated over its effective lifetime from July 1.

It’s also been announced that the gross domestic product adjustment factor for PAYG and GST instalments, which helps SMEs manage their cash flow, will be set to six per cent for the 2023–24 income year to help SMEs manage tax instalments and improve cash flow.

This is a drop from 12 per cent under the statutory formula to better reflect economic conditions.

The new rate will apply to SMEs with up to $10 million aggregated annual turnover for GST instalments, and $50 million annual aggregate turnover for PAYG instalments.

It will relate to instalments during the 2023–24 income year that are due if and when the enabling legislation receives royal assent.

The budget also included measures to allow SMEs to authorise their tax agent to lodge multiple Single Touch Payroll forms on their behalf from 1 July 2024, thereby reducing their paperwork.

Lodgement penalty amnesty

In more good news for struggling SMEs, the government announced a lodgment penalty amnesty program to encourage them to re-engage with the tax system and update their obligations.

The amnesty applies to tax obligations, including income tax and business activity statements, that were originally due between 1 December 2019 and 28 February 2022.

It will only benefit businesses that, at the time of lodgment, had an aggregated turnover of less than $10 million and lodge their returns between 1 June 2023 and 31 December 2023

It will not apply to privately owned groups or individuals controlling over $5 million of net wealth.

Payday super arrives

However, in a move that could hurt the future cash flow of battling SMEs, the government revealed that the practice of quarterly superannuation guarantee payments will end on 1 July 2026.

From then on, employers will have to pay their workers’ super at the same time they pay their regular wages or salaries.

The superannuation industry has welcomed the move because it will help many Australians to grow their retirement savings faster. Although some experts worry that it will increase complexity and processing costs for SMEs.

Industry growth program

This new program will offer advice and grants to start-ups and SMEs to help them commercialise their ideas and grow.

It will be funded by $392.4 million over four years, starting from 2023–24 and $68.2 million a year after that.

One of its priorities is to widen the pipeline of investment-ready projects for the $15 billion National Reconstruction Fund to consider in coming years.

Alongside this program, the government is also committing $39.6 million over the next four financial years, and $11 million a year thereafter, to continue the Single Business Service, which aims to help SMEs better engage with all levels of government.

With cyber security a major threat, the government is backing a Council of Small Business Organisations Australia program with $23.4 million over three years to assist with training in-house cyber wardens at SMEs.

Do any of these measures benefit you? Contact us today to find out and to discuss funding options to help grow your business.

ScotPac is Australia and New Zealand’s largest non-bank SME business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion revenues. For more than 30 years ScotPac has helped thousands of business owners succeed, offering fast and flexible funding. From simple to complex, small to large, start up, growth or turnaround – ScotPac can help with a range of funding from Invoice, Trade or Asset Finance to Home Loans and Business Loans.