Maria and I offer a business owner's perspective on the proposed budget, with a focus on those managing their own Self Managed Super Fund (SMSF).
Marginal tax rates are to remain the same for 2023-24.
Short-term rental owners
The ATO and Treasury have received additional funding of over $90 million to extend the Personal Income Tax Compliance Program. The program addresses non-compliance in key areas and emerging risks, such as improper deductions for short-term rental properties that are not genuinely available for rent. The program is expected to generate an extra tax revenue of approximately $475 million. If you own a holiday home or short-term rental, it's essential to be aware of this development.
Suppose an individual has a total superannuation balance greater than $3 million at the end of June. In that case, they will be subject to a 30% tax on their earnings greater than $3 million starting from 1 July 2025. This tax only applies to the portion of earnings that exceed the $3 million threshold. If an individual has negative earnings, they can carry them forward and offset them against future earnings. The individual or their superannuation fund can pay the tax.
Superannuation Guarantee set to increase to 11% on 1 July 2023.
Employers - PayDay Super
At present, employers are required to make super contributions every quarter. However, proposed changes would require employers to pay super contributions on payday starting from 1 July 2026.
To triple Medicare bulk billing incentive for most common GP consultations for children under 16, pensioners and other Commonwealth concession card holders.
Instant Asset Write-off disappears
The existing instant depreciation measures for businesses will end on 30 June 2023; refer to our Instant Asset Write-Off blog.
Small Business Energy Incentive
For small and medium-sized businesses with a combined turnover of under $50 million, a 20% additional deduction is available for eligible depreciating assets that support energy efficiency and electrification. This incentive allows for a maximum additional deduction of $20,000 on up to $100,000 of total expenditure. Examples of eligible assets include energy-efficient fridges, heat pumps, and electric heating or cooling units. To qualify, these assets must be first used or installed between 1 July 2023 and 30 June 2024. While full details are still being finalised, it's worth noting that exclusions will apply to electric vehicles, capital works, renewable electricity generation, assets not connected to the electricity grid, and assets that use fossil fuels.
In 2023/24, small businesses and individuals can benefit from reduced tax instalments, PAYG, and GST instalment adjustment factor to 6% instead of 12%. This applies to those with an aggregated turnover of up to $10 million for GST instalments and up to $50 million for PAYG instalments.
Small businesses will soon have the opportunity to amend their income tax returns for up to four years starting from July 1, 2025.
Small business amnesty
Small businesses can use a lodgement penalty amnesty for failure to lodge penalties. This amnesty will apply to tax statements originally due between 1 December 2019 and 28 February 2022 as long as they are lodged between 1 June 2023 and 31 December 2023.
Global minimum tax rate
For multinational groups with consolidated revenue surpassing Euro 750 million (approximately $1.2 billion), a minimum tax rate of 15% applies.
There have been funding cuts for the Export Market Development Grants program, and the ATO has been given an additional $600 million to increase GST compliance. The capital works tax deduction rate for build-to-rent development programs have increased to 4% per year. The final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments has been reduced from 30% to 15%. Furthermore, the clean building MIT withholding concession has been expanded to include data centres and warehouses.