Budget impacts on Business
Seven Word Summary: State and Federal Budget impacts on business.
On May 9, Treasurer Jim Chalmers delivered the Federal Budget responding to the immediate global challenges with the task of setting Australia up for a better future. Coincidentally only two days later, former WA Premier and Treasurer Mark McGowan handed down the State Government’s sixth consecutive surplus, heavily supported by strong export growth.
“Why do the Federal and State Budgets matter to me and my business?”
Good question. Here’s our take…
Australia has faced significant economic challenges following the COVID-19 pandemic in 2020. The global slowdown, persistent inflation and rising interest rates have put pressure on household budgets and has slowed domestic demand.
However, Australia is expected to outperform all major advanced economies due to high export commodity prices and low levels of unemployment. Inflation has begun to fall from its peak of 7.8 per cent, expected to return to target levels of 2-3 per cent in 2024-25.
Western Australia has remained the country’s strongest economy, handing down a surplus of $4.2 billion, exceeding the Federal Government’s surplus of $4 billion. However, both the State and Federal Budgets focus on addressing the cost-of-living crisis that is squeezing the pockets of Western Australians, with very little direct support for business.
COST-OF-LIVING RELIEF
It is no secret that Australians are feeling the pinch amid the cost-of-living crisis. The Federal Budget aims to address major cost-of-living challenges such as power bills, health costs, supporting those in need, affordable housing, and moving wages.
Power bill relief
$500 electricity bill relief for 5 million Australians.
Helping 170,000 households save on energy bills through financing home upgrades.
Reducing out-of-pocket health costs
Tripling the bulk bulling incentive for eligible Australians.
Reduced medicine costs for at least 6 million Australians.
New Urgent Care Clinics that bulk bill.
Australians most in need
Supporting 57,000 single parents through expanding the Parenting Payment eligibility.
Increasing the base rate of JobSeeker and other payments for 1.1 million Australians.
Affordable housing measures
1.1 million households will have their Commonwealth Rent Assistance increased.
Investment in social and affordable housing schemes.
Tax breaks to ensure more investment in build-to-rent projects.
Keeping wages moving
15 per cent wage rise on award wages for aged care workers.
Low-paid workers wage increase.
The WA State Budget also focuses heavily on cost-of-living, including more than $715 million in relief to support Western Australians.
Energy bill relief
Households will receive at least $400 in energy bill relief, with small businesses receiving up to $650. For 350,000 eligible for the Energy Assistance Payment, up to $826 of support has been made available in relief.
Public transport
The Government has introduced Fare Free Sunday Sessions, making public transport free on the first Sunday of every month. In addition, public transport fares will be capped at two zones, saving thousands of dollars per year for commuters.
Supporting those most in need
The Hardship Utilities Grant Scheme payments have been increased by 10 per cent, supporting those who cannot pay their utility bills. The Seniors’ Cost-of-Living Rebate has also been increased in line with inflation.
What about measures for small and medium sized businesses?
ENERGY GRANTS FOR SMALL AND MEDIUM SIZED BUSINESSES
The Australian Government is providing a tax break under the Small Business Energy Incentive to help businesses save on their energy bills. The tax break will incentivise investments such as electrifying heating and cooling systems, upgrading to more efficient induction cooktops and fridges, and installing batteries and heat pumps. In addition, businesses with an annual turnover of less than $50 million will have access to a bonus 20 per cent tax deduction for eligible assets supporting more efficient use of energy from July 1 2023 until June 30 2024.
In partnership with state and territory governments, the Australian Government will also deliver up to $3 billion of electricity relief for eligible small businesses. The plan will provide up to $650 of relief from July 2023, however this total will vary across states and territories.
SMALL BUSINESS ASSET WRITE-OFF
The instant asset write-off threshold has increased to $20,000 from July 1 2023 until 30 June 2024 under the Federal Government. The updated scheme will be available to eligible businesses that have an annual turnover of less than $10 million, allowing businesses to immediately deduct the full cost of eligible assets costing less than $20,000.
JOBS AND SKILLS
Through the new National Skills Agreement, the Federal Government will deliver funding for 300,000 TAFE and vocational education training places to become fee free.
$72.4m will be allocated to support the skills and training of workers in the early childhood education and care sector, including $34.4m to support educators to undertake professional development.
$37.9m to provide financial assistance for educators to complete their practicum requirements for a Bachelor or postgraduate degree.
The State Government has also provided measures to support jobs and skills across a range of sectors.
$26.9 million to support employers of apprentices and trainees in the Building and Construction sectors.
$11.5 million to attract skilled migrants in the construction sector, with visa subsidies of up to $10,000.
$4.2 million to support the completion of apprenticeships and traineeships through a $2,000 completion payment and $500 tool allowance in the construction and building sector.
TAX OBLIGATIONS SIMPLIFIED
The Federal Budget includes measures to make it easier for small businesses to meet their tax obligations, these include:
A halving of the increase in quarterly tax instalments for GST and income tax in 2023–24. Instalments will only increase by 6 per cent instead of 12 per cent.
A lodgement penalty amnesty program for small businesses with aggregate turnover of less than $10 million to encourage them to re-engage with the tax system.
Tax agents can file multiple Single Touch Payroll forms on their clients’ behalf from mid-2024.
Small business will have up to 4 years to amend their tax returns, from 1 July 2025.
CYBERSECURITY SUPPORT
In the modern digital world, a comprehensive cybersecurity strategy for businesses has become increasingly important. To help aid small businesses against cyber threats, the Australian Government will fund measures through a $23.4 million program to help train in-house cyber wardens. The program will be delivered by the Council of Small Business Organisations Australia.
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