‘Ace in the Hole’ Budget 2023-24
The ‘ace in the hole’ of the 2023-24 Federal Budget was the $4.2bn surplus; the first in 15 years.
The surplus was driven by a surge in the corporate and individual tax take. High commodity prices, inflation, and high employment have all pushed up corporate and individual tax receipts. But the gains can't be relied on long term. The Budget is expected to deliver a deficit of $13.9 billion in 2023-24, and a $35.1bn deficit in 2024-25.
Access the full detailed summary now (a new window will open upon clicking)
Social initiatives dominated the Budget:
- Energy bill relief for some households and small business
- Encouraging doctors to offer bulk billing by tripling the incentive for children under 16, pensioners and other Commonwealth card holders
- Increases to commonwealth rent assistance
- Increases to JobKeeper and other income support payments
- Expanding access to the single parenting payment
The legislated stage 3 tax cuts legislated to take effect on 1 July 2024 remain in place. Stage 3 radically simplifies the tax brackets by collapsing the 32.5% and 37% rates into a single 30% rate for those earning between $45,001 and $200,000.
For small business, the instant asset write-off will enable multiple assets of up to $20,000 to be written-off in the year of purchase.
What wasn’t in the Budget?
There was no mention of the loss carry back rules for companies, suggesting that these rules will expire on 30 June 2023, along with the temporary full expensing rules. The loss carry back rules allow eligible companies to apply tax losses against taxable profits made in certain previous income years, rather than carrying them forward to future years.
There is no mention of the simplification of Division 7A - Division 7A captures situations where shareholders access company profits in the form of loans, payments or the forgiveness of debts. The 2016-17 Federal Budget proposed changes to reduce the compliance burden of Division 7A. These changes were initially meant to apply from 1 July 2018 but were deferred a number of times, before the Government announced that any changes would commence from the start of the income year following the date on which the changes receive Royal Assent. Aside from a Treasury discussion paper released back in October 2018, this issue remains in limbo.
The Budget also doesn't refer to either the Skills and Training Boost or the Technology Investment Boost. These measures, announced by the previous Government, would provide a bonus deduction equal to 20% of qualifying expenditure if the legislation containing these measures is passed in its current form (Treasury Laws Amendment (2022 Measures No. 4) Bill 2022). The Technology Investment Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2023. The Skills and Training Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2024.
What's in our detailed summary
Read up on all the measures, including:
Individuals & families
- Energy price plan relief
- Household energy upgrade fund
- Incentive to provide Medicare bulk billing to concession card holders and children
- Less people to pay Medicare Levy
- Exempting lump sum payments in arrears from Medicare Levy
- Increasing JobSeeker
- Single parent payment increase
- Increased rent assistance
- Scheme enabling pensioners to earn more extended
- In-home aged care increase
- Access to home guarantee scheme expanded to friends and siblings
Superannuation & investors
- Clarifying the non-arms length income rules for super funds
- Confirmed 30% tax on super earnings above $3m
Business & employers
- $20,000 small business instant asset write-off
- $20,000 small business incentives for energy efficiency
- Lowering tax instalments for small business
- ‘Payday’ super - Increasing payment frequency of employee super
- Hybrid cars excluded from FBT exemption for electric cars
- Franked distributions funded by capital raisings start date
- Tax breaks for build-to-rent developments
- Cost of tobacco to increase from September
- 15% multi-national global and domestic minimum tax
- Heavy vehicle user charge increase
- Tax law changes for general insurers
- Clean building MIT withholding tax concession extended
- Tax treatment of exploration and mining, quarrying and prospecting rights
- Bringing forward tax on natural gas
- Picking winners: Hydrogen industry
- Critical technology industry support
- Support for child care workforce
- 15% pay increase for Aged Care Workers
- Scrapped ‘Patent Box’ regime
- Delayed Streamlining excise administration for fuel and alcohol
- Film industry location offset
Government & regulators
- Extending Part IVA anti-avoidance rules
- AAT to be replaced
- Small business ATO compliance
- Personal income tax compliance and rental property owners under scrutiny
- Lowering tax and super liabilities
- Small business lodgment penalty amnesty
- GST compliance program extended
- Serious Financial Crime Taskforce and Serious Organised Crime program extended and merged
- Anti-slavery Commissioner
Other
- Support for SMEs and start-ups
- Cybersecurity funding
- Disruptive defence technology funding
- Direct pathway for kiwis to become Australian citizens
- Reintroduction of work hour cap on international student visa holders
- International student post-study work rights extended
- Increase in wage expectations for temporary skilled workers
- Visa application charges increase
- $1bn to boost biosecurity
The economy
- In surplus …for now
- Inflation to drop to 3.25%
- Debt still an issue
- Growth slow down
- Unemployment remains low
- Identified savings
- Timeline of initiatives
If we can assist you to take advantage of any of the Budget measures, or to risk protect your position, please let us know.
As always, we’re here if you need us!