2024 Budget Overview for Business Owners

The 2024 Federal Budget was announced on Tuesday 13th May 2024 and introduces several key measures that will significantly impact individuals and businesses. We discuss some of the main announcements relevant to Australian businesses.

Budget announcements that will impact businesses

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$20,000 instant asset write-off extended to 30 June 2025

An extension of the $20,000 instant asset write-off for small businesses was announced, which will continue until June 30, 2025. This measure was set to end on June 30, 2024, but has been extended for another year to help business owners with asset purchases.

This extension applies to small businesses with a turnover of less than $10 million, allowing them to claim an immediate deduction for eligible assets costing less than $20,000 that are first used or installed between July 1, 2023, and June 30, 2025.

It's important to note that this measure is part of the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, which is still before Parliament and not yet law.

The $20,000 limit applies to each asset, so businesses can write off multiple assets for tax purposes instantly. Additionally, the suspension of the five-year lockout rule for businesses opting out of simplified depreciation rules is extended to June 30, 2025.

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General anti-avoidance rule updated

The 2023-24 Federal Budget introduced a measure to strengthen the Australian tax system by expanding the general anti-avoidance rule (Part IVA of the Income Tax Assessment Act 1936). This expanded rule will target schemes used by businesses that reduce taxes paid in Australia by taking advantage of lower withholding tax rates on income paid to foreign residents. Additionally, the rule will now apply to schemes that result in an Australian tax benefit, even if their main goal was to reduce foreign taxes.

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$325 Energy Rebate for Eligible Small Businesses

The Energy Bill Relief Fund, which started in 2023-24, is now extended and expanded to offer $3.5 billion in energy bill relief for all Australian households and certain small businesses.

Starting July 1, 2024, the Government will give a $325 electricity bill rebate to about 1 million eligible small businesses. This rebate will be applied as credits on your electricity bill, spread out over the 2024-25 year in quarterly instalments.

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Changes to Capital Gains Tax (CGT) for foreign residents

Starting July 1, 2025, foreign residents who make a capital gain or loss from selling or transferring Australian real property will face new CGT rules.

These changes aim to align Australian laws with OECD standards and will:

• Clarify and expand the types of assets subject to CGT for foreign residents.
• Change the principal asset test to a 365-day testing period.
• Require foreign residents selling shares or other membership interests worth over $20 million to notify the ATO before the transaction is completed.

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Critical Minerals and Hydrogen Production tax incentives

Treasurer Jim Chalmers detailed the "A Future Made in Australia" policy, announcing a $22.7 billion investment over a decade to maintain Australia's key role in the global economy during a major transformation. This includes $13.7 billion in production tax credits for green hydrogen and 31 critical minerals to strengthen supply chains.

Renewable hydrogen producers will receive $2 per kilogram of hydrogen produced from 2027-28 for up to 10 years, costing $6.7 billion, while $7 billion will support critical minerals producers, covering 10% of their processing and refining costs. The plan also involves enacting a Future Made in Australia Act to establish a national interest framework for prioritising industry investments.

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Employee Super Guarantee to be paid each payday

The Federal Budget confirmed the implementation of payday superannuation starting July 1, 2026. This means employers will be required to pay the Superannuation Guarantee to their employees at the same time they pay salaries and wages, instead of quarterly. Although announced on May 2, 2023, it is not yet law, but its inclusion in the budget indicates the Government's intention to proceed with this measure.

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Tax cuts

The Government confirmed that previously announced tax cuts will take effect from July 1, 2024. These changes include lower tax rates and adjustments to income brackets. Discover more about how the Stage 3 Tax Cuts could impact you.

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The ATO’s pursuit of debt

The ATO have taken a more aggressive approach in their pursuit of debt over the last couple of years, and this doesn’t appear to be slowing down any time soon. However, it was announced that the budget will provide $10.8 million to extend the Small Business Debt Helpline and the New Access for Small Business Owners initiative. This funding, spread over two years, will offer financial counselling and mental health support for small business owners.

A measure that may provide relief to low-income taxpayers with tax debt, the Budget announced a change to the law that will allow the Commissioner of Taxation to choose not to use a taxpayer's refund to pay off old tax debts if those debts were put "on hold" before January 1, 2017.

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Seek professional guidance for your business

The 2024 Federal Budget introduced several significant changes that will impact businesses across Australia. From extensions of tax incentives to updates in capital gains tax and the introduction of payday superannuation, navigating these changes can be complex for business owners. To ensure you make the most of these opportunities and comply with new regulations, seeking advice from a qualified accountant is crucial. At Bonerath & Co., we can help you understand how these changes affect your business and develop strategies to optimise your financial situation. Please reach out to us today if you’d like to discuss.

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