Australia has introduced a string of tax and superannuation changes this financial year, which CFOs and finance teams need to be aware of. Some provide welcome incentives for private businesses while others could create administrative pressures if not understood and planned for accordingly.
Small business boosts
If your business has an aggregated turnover of less than $50m, you can now claim an extra 20% deduction for eligible expenditure on skills and training and investment into technology.
Businesses have been anxiously waiting for an announcement regarding the fate of these ‘boosts’ which were announced by the former government in March last year but only legislated for on 23 June 2023.
1. Technology investment
For technology investment costs to be eligible, they must have been incurred after 7.30pm on 29 March until 30 June 2023 by which time any asset or subscription must have been used or installed ready for use.
Eligible technology investments include those incurred for the purposes of digitising operations; and depreciating assets such as portable payment devises, cyber security systems or subscriptions to cloud-based services. Eligible expenditure is capped at $100k a year.
2. Skills and training
You still have until 30 June 2024 to spend accordingly and receive the 20% deduction for the skills and training boost.
Eligible expenditure includes that incurred for the provision of training to one or more employees and incidental costs relation to the training (such as books and equipment needed for the course). Training must be provided by a Registered Training Partner.
Ineligible expenses are those incurred for the provision of training to non-employee business owners and costs added onto an invoice by an intermediary on top of the cost of training (e.g., commissions).
If your business is registered for GST and the training is not GST-free, the bonus deduction is calculated on the GST exclusive amount plus any GST you can’t claim as a GST credit.
3. Energy incentive
The ATO is yet to provide guidance on a third boost, which was announced in this year’s Federal Budget and provides a 20% deduction on spending that supports electrification and more efficient use of energy.
The proposed boost will be for eligible assets or upgrades first used or installed ready for use between 1 July 2023 and 30 June 2024. Assets might include electrified heating and cooling systems, efficient fridges, efficient induction cooktops, installed batteries and heat pumps.
Up to $100,000 of total expenditure will be eligible, with the maximum bonus tax deduction being $20,000 per business.
It’s important you stay up to date with ATO announcements regarding the boost so once legislated, you can invest in your business’s sustainability if possible and take advantage of the tax break.
End of temporary full expensing and return of instant asset write-off
The temporary full expensing deduction that applied to businesses with an aggregated turnover of less than $5 billion and corporate tax entities that met the alternative income tax, has ended.
However, the instant asset write-off has returned, with a $20,000 threshold. If yours is a small business with an aggregated annual turnover of less than $10 million, you can immediately deduct the full cost of eligible assets less than $20,000 if they are first used or installed ready for use between 1 July 2023 and 30 June 2024.
Assets valued at $20,000 or above can’t be immediately deducted and rather, are placed into the small business simplified depreciation pool where they’re depreciated at 15% in the first income year and 30% for each year thereafter.
If your business however has an aggregated turnover of $10m or chooses not to use the simplified depreciation rules, you will need to calculate an asset’s decline in value in accordance with the normal depreciation rules, but may be able to utilise the ATO’s administrative approach for low-cost assets up to $100, which you can find out more about here.
Digital games tax offset
If your company is in the business of developing digital games in Australia, you could be eligible for a 30% refundable tax offset of your total ‘qualifying Australian development expenditure’ as determined by the Minister for the Arts. The Minister must provide your company with a completion, porting, or ongoing development certificate to be eligible.
You can read more about the offset in our article here.
From 1 July 2023, you must make Super Guarantee contributions to your PAYG employees at the new rate of 11%. This will go up by 0.5% each financial year until it reaches 12% in FY26.
You can expect legislation on the introduction of payday superannuation from 1 July 2026, as targeted consultation has already commenced. It’s important you stay abreast of updates on this change, as complying with payday superannuation payments will require substantial administration.
The ATO has announced it will receive additional resourcing to detect unpaid super payments earlier. The Government will support this by setting enhanced targets for the ATO for the recovery of payments, so it’s critical you comply.
With the new financial year bringing several tax breaks for Australian businesses and significant superannuation changes, it’s essential that CFOs are up to date and can guide their finance teams accordingly. Failure to plan could mean missed opportunities, substantial administrative costs and penalties for non-compliance. For more information on this year’s tax changes and how your business can respond effectively, contact your local William Buck Tax Specialist.