Table of contents
Find out about the key changes that will impact your startup or small business.
Introduction
The Australian budget is a key announcement made by the government each year that outlines its financial plans for the upcoming year. It covers areas such as taxation, spending, and other economic policies. This budget is important for small businesses and startups, as it can impact their operations and the assistance available to them.
In this year’s budget, which was released on 9 May 2023, the Australian government announced several measures to support small businesses and startups.
Support for small businesses and startups
PAYG and GST instalments will decrease
- The PAYG and GST instalment GDP adjustment factor will be set at 6% for the next financial year, down from the previous 12%. The GDP adjustment factor is the method the ATO uses to calculate how much is payable in tax instalments over the course of the year.
- Who does it benefit? PAYG instalment payers with up to $50 million annual aggregate turnover. GST instalment payers with up to $10 million aggregated annual turnover.
- Impact: While this measure does not change the overall PAYG and GST liability of small businesses, the reduction means small businesses and startups will be given cash flow support in the short term.
The instant asset write-off threshold increase will continue
- Small businesses can continue to immediately deduct the full cost of eligible assets costing less than $20,000 that are purchased for their business and used in the 2023-2024 financial year.
- The $20,000 threshold can apply to multiple assets.
- A previous restriction on small businesses opting (back) in to the instant asset write-off scheme will be suspended this financial year, meaning all small businesses are eligible to participate.
- 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 per cent in the first income year and 30 per cent each income year thereafter.
- Who does it benefit?
- Small businesses with aggregated annual turnover of less than $10 million.
- Business owners who are looking to invest in eligible assets to help grow their business.
- Those who want to simplify their tax return and cash flow by being able to immediately deduct the full cost of eligible assets.
- Impact: Small businesses looking to invest in new assets, including hardware, furniture and cars can benefit from a higher threshold to write off the expense. For more information on what assets are considered eligible assets, see the explanation on the ATO website.
Increased deductions for energy efficient purchases
- For the 2023-2024 financial year, small and medium businesses 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.
- Items such as fridges, heating and cooling systems, and batteries, will be eligible for the increased deductions.
- Who does it benefit? Small and medium businesses, with aggregated annual turnover of less than $50 million.
- Impact: Small and medium businesses will be able to save on energy bills in the long term, through higher tax write offs for purchases of energy efficient products.
Startups benefit from the Industry Growth Program
- A new Industry Growth Program will be launched to support small businesses and startups to commercialise their ideas and grow their operations.
- The Single Business Service will receive additional funding to help small businesses and startups engage with the government, including through the ongoing operation of business.gov.au.
- Who does it benefit? Startups and small businesses operating in the priority areas of the National Reconstruction Fund.
- Impact: While there is little detail available about the specific program, what we know so far is that the funding will be used to provide grants, advice, and mentorship to startups in priority sectors.
Other measures in the budget
Other measures that will have a positive impact on small businesses and startups include:
- the establishment of the Energy Bill Relief Fund that will provide energy bill relief to small businesses as well as households;
- dedicated spending to increase artificial intelligence capabilities;
- the creation of a small business cyber wardens program, to support small businesses to build in-house capability to protect against cyber threats;
- enhanced tax compliance measures from 1 July 2024, to assist small businesses to comply with their income tax return obligations;
- a ‘first phase’ complaints mechanism established by the Australian Competition and Consumer Commission to address systemic issues for consumer and small business advocacy groups; and
- a variety of targeted incentives for regional businesses.
The budget also includes measures that may negatively impact small businesses and startups, as the funding for incentive programs is drawn from existing measures. For example, the Entrepreneurship Facilitators Program will cease from 1 July 2023. In addition, the budget foreshadows additional obligations to apply to businesses, including the requirement to pay superannuation guarantee payments at the same time as payroll (rather than once a quarter), which is expected to come into effect in 2026.
Want to chat?
If you have any questions about how these budget measures may impact your small business or startup, contact Burch&Co today. We are here to provide guidance and support to help you navigate any changes and make the most of new opportunities.
Last updated: 22 August 2024
