Another year, another political document disguised as a financial document.
OK, that’s the last subjective statement I’ll make about this week’s budget…sort of.
Immediate depreciation of assets
From a small business perspective, it was a tight budget.
The large one has decreased in the immediate depreciation of assets to $20,000 per 1 July 2023.
The government is selling it as an increase since it was set to return to $1000 per July 1st.
This is closer to the pre-pandemic amounts, before temporary full expensing made it a virtually unlimited deduction.
Temporary full charge expires June 30, 2023.
Energy incentive for small businesses
Another point of interest was the finalization of the previously announced energy incentive for small businesses, which allows an additional deduction of up to 20 percent of the cost of assets used for more efficient energy use – specifically electrification and heating/cooling systems.
Assets such as electric cars are excluded from this measure, as are assets that rely on fossil fuels.
This deduction is capped at $20,000, so expenses over $100,000 will not add to the total deduction.
The PAYG increase slowed down
The other small offer they made to small businesses is to limit the statutory increase applied to PAYG installments (these are installment payments of tax made quarterly by businesses against their annual income tax).
The formula used would have made it a 12 percent increase, but it will now be adjusted down to six percent for small businesses – those with a turnover of up to $50 million.
Reduces the administrative burden.
Other measures of interest are an attempt to reduce the burden on SMEs when audited and also to provide more tax clinic services to provide more accessible tax advice to the smaller end of the market without the sometimes prohibitive costs.
Additionally, some relaxation of the Single Touch Payroll rules by allowing tax agents to file multiple periods on behalf of a client.
The practice of issuing some refunds by check will be reduced, and small businesses will have four years from July 1, 2025 to amend their tax returns.
Collection of tax
As always, tax collection plays a prominent role in all budgets, this one was no different.
Provision was made for a filing penalty amnesty and more resources to engage with taxpayers who have long overdue liabilities and debts.
Personal income tax and GST compliance programs received increased funding and an extended duration of current programs.
Specifically, there will be a focus on short-term rental deductions to ensure that the properties are actually available for rent.
At the time of writing, the budget was only just being revealed and digested. There will no doubt be many comments over the next month or so.
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