Federal Budget 2023-24 Summary
Key Points
There are a range of measures to provide cost-of-living relief to individuals such as increased and expanded JobSeeker payments and better access to affordable housing. There are no changes to the Stage 3 personal income tax cuts legislated to commence in 2023–24.
For small business, a temporary $20,000 threshold for the small business instant asset write-off will apply for one year, following the end of the temporary full expensing rules.
The tax, superannuation and social security highlights are set out below.
Business
Instant asset write-off threshold of $20,000 for 2023–24
The instant asset write-off threshold for small businesses applying the simplified depreciation rules will be $20,000 for the 2023–24 income year.
This means small businesses with an aggregated annual turnover less than $10 million may choose to calculate capital allowances on depreciating assets under a simplified regime where an immediate write-off applies for low-cost depreciating assets.
The measure will apply a $20,000 threshold for the immediate write-off, applicable to eligible assets costing less than $20,000 first used or installed between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write-off multiple low-cost assets.
However, assets costing $20,000 or more will continue to be placed into a small business depreciation pool under the existing rules.
Small and medium business expenditure on electrification and energy efficiency
There will be an additional 20% deduction available for small and medium business (with aggregated annual turnover of less than $50 million) expenditure supporting electrification and energy efficiency. Eligible expenditure may include the cost of eligible depreciating assets, as well as upgrades to existing assets, that support electrification and more efficient use of energy.
There will however be certain exclusions, including for electric vehicles, renewable electricity generation assets, capital works, and assets not connected to the electricity grid that use fossil fuels.
Here are some examples of expenditure the measure will apply to:
• Assets that upgrade to more efficient electrical goods,
• assets that support electrification, and
• demand management assets.
The total eligible expenditure for the measure will be capped at $100,000, with a maximum additional deduction available of $20,000 per business. When enacted, the measure will apply to eligible assets or upgrades first used or installed ready for use between 1 July 2023 and 30 June 2024.
FBT exemption for eligible plug-in hybrid electric cars to end
The FBT exemption for eligible plug-in hybrid electric cars will end from 1 April 2025. If you have an arrangements involving plug-in hybrid electric cars entered into between 1 July 2022 and 31 March 2025 remain eligible for the exemption.
Small business lodgment penalty amnesty (unpaid tax and super)
There will be a lodgment penalty amnesty program for small businesses with aggregate turnover of less than $10 million to encourage them to re-engage with the tax system.
The amnesty will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due during the period from 1 December 2019 to 29 February 2022.
Integrity measure to target unpaid tax and super
There will also be funding from 1 July 2023 over 4 years to assist the ATO to engage more effectively with businesses to address the growth of tax and superannuation liabilities.
The additional funding will facilitate ATO engagement with taxpayers who have high value debts over $100,000 and aged debts older than 2 years where those taxpayers are either public and multinational groups with an aggregated turnover of greater than $10 million, or privately owned groups or individuals controlling over $5 million of net wealth.
PAYG and GST instalment uplift factor
The Budget papers state that the GDP uplift factor for PAYG and GST instalments will be set at 6% for the 2023-24 income year. The papers state that this uplift factor is lower than the 12% that would have applied under the statutory formula.
The 6% GDP uplift rate will apply to small to medium enterprises eligible to use the relevant instalment methods (up to $10 million annual aggregated turnover for GST instalments and $50 million annual aggregated turnover for PAYG instalments) in respect of instalments that relate to the 2023-24 income year and fall due after the enabling legislation receives assent.
Individuals
Personal tax rates
There were no announcements regarding personal tax rates changes. The
Stage 3 tax changes commence from 1 July 2024, as previously legislated.
The 2023–2024 tax rates and income thresholds for residents (unchanged since 2021–2022) are:
Taxable income ($) Tax payable ($)
0 - 18,200 Nil
18,201 - 45,000 Nil + 19% of excess over 18,200
45,001 - 120,000 5,092 + 32.5% of excess over 45,000
120,001 - 180,000 29,467 + 37% of excess over 120,000
180,001 + 51,667 + 45% of excess over 180,000
The Budget did not announce any changes to the Stage 3 personal income tax changes, which are set to commence from 1 July 2024, as previously legislated. From 1 July 2024, the 32.5% marginal tax rate will be cut to 30% for one big tax bracket between $45,000 and $200,000.
The tax rates and income thresholds from the 2024-25 for residents (as already legislated) are:
Taxable income ($) Tax payable ($)
0 - 18,200 Nil
18,201 - 45,000 Nil + 19% of excess over 18,200
45,001 - 200,000 5,092 + 30% of excess over 45,000
200,001 + 51,592 + 45% of excess over 200,000
Low income tax offsets - LMITO not extended beyond 2021-22
The 2023-24 Budget did not announce any extension of the low and middle income tax offset (LMITO) beyond the 2021-22 income year. The LMITO has now ceased and been fully replaced by the low income tax offset (LITO).
Low income tax offset for 2023 -24 (unchanged)
For completeness, and as a reminder, while the LMITO has now ceased, low and middle income taxpayers remain entitled to the low income tax offset (LITO). No changes were made to the LITO in the 2023-24 Budget. The LITO will continue to apply for the 2023-24 income year and beyond.
The maximum amount of the LITO is $700. The LITO is withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000 and then at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.
Increased rate for income support payments
Income support payment base rates will be increased by $40 per fortnight.
The increase will apply to JobSeeker Payment, Youth Allowance, Parenting Payment (Partnered), Austudy, ABSTUDY, Disability Support Pension (Youth) and Special Benefit from 20 September 2023.
Expanded eligibility for higher Jobseeker Payment rate
The minimum age for which older people qualify for the higher JobSeeker Payment rate will be reduced from 60 to 55 years. This applies to those who have received the payment for 9 or more continuous months.
Eligible recipients will receive an increase in their base rate of payment of $92.10 per fortnight.
Improved support for single parents
Eligibility for Parenting Payment (Single) will be extended to support single principal carers with a youngest child under 14 years of age.
The existing eligibility provides support to single principal carers with a child aged under 8 years of age. Improved support for single parents will provide wellbeing benefits particularly for single mothers, who are overwhelmingly the recipients of this payment, and their children. This measure recognises that caring responsibilities can act as a barrier to employment while also recognising that connections with the labour force are likely to improve economic outcomes throughout a carer’s lifetime.
Increased support for Commonwealth rent assistance
The maximum rates of the Commonwealth Rent Assistance (CRA) allowances will be increased by 15% to help address rental affordability challenges for CRA recipients.
Superannuation
Reducing tax concessions for super balances exceeding $3 million
Superannuation earnings tax concessions will be reduced for individuals with total superannuation balances in excess of $3 million.
From 1 July 2025, earnings on balances exceeding $3 million will incur a higher
concessional tax rate of 30% (up from 15%) for earnings corresponding to the
proportion of an individual’s total superannuation balance that is greater than $3 million. The change does not impose a limit on the size of superannuation account balances in the accumulation phase and it applies to future earnings, ie it is not retrospective.
Earnings relating to assets below the $3 million threshold will continue to be taxed at 15%, or zero if held in a retirement pension account.
Employers to be required to pay super guarantee on payday
Employers will be required to pay their employees’ superannuation guarantee (SG) entitlements at the same time as they pay their salary and wages from 1 July 2026.
Employers are currently required to make SG contributions for an employee on a quarterly basis to avoid incurring a superannuation guarantee charge.
The proposed commencement date of 1 July 2026 is intended to provide employers, superannuation funds, payroll providers and other stakeholders sufficient time to prepare for the change.
Changes to the design of the superannuation guarantee charge will also be required to align with the increased payment frequency. The government will consult with relevant stakeholders on the design of these changes, with the final framework to be considered as part of the 2024–25 Budget.
The Papers also state that the ATO will receive additional resourcing of $40.2 million to help it detect unpaid super payments earlier. It is estimated that $3.4 billion worth of super went unpaid in 2019-20. The Government will also set enhanced targets for the ATO for the recovery of payments.
Super pensions: No reduction in minimum drawdowns for 2023 -24
The Budget did not announce a further extension to 2023-24 of the temporary 50% reduction in the minimum annual payment amounts for superannuation pensions and annuities. As a result, the 50% reduction in the minimum pension drawdowns, which has applied for the 2019-20 to 2022-23 income years, is set to end on 30 June 2023.
Accordingly, superannuation trustees and members will need to start planning for the additional cash flow requirements to satisfy the minimum annual payment amounts for 2023-24 in relation to account- based, allocated and market linked pensions.
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