The Treasurer, the Honourable Dr Jim Chalmers MP, handed down the 2023-24 Federal Budget at 7:30 pm (AEST) on 9 May 2023.
- Read our analysis of the major announcements here
- The budget surplus is estimated to be $4.2 billion (0.2% of GDP).
- The Budget forecasts a deficit of $13.9 billion (0.5% of GDP) in 2023‑24 and gross debt as a share of the economy is now expected to peak lower at 36.5% of GDP in 2025‑26.
- Unemployment is expected to remain low – 4.25% in 2023–24 rising to 4.5% in 2024-25.
As expected, the primary focus of Federal Budget is to alleviate cost of living pressures being felt across Australia. No major tax changes have been announced but the Budget does include commitments towards health, support payments and creation of affordable housing.
From a tax perspective, for individuals, no major announcements have been made. Furthermore, no announcements have been made that impact the stage three tax cuts which commence from 1 July 2024. As part of the legislated tax cuts, the 37% tax rate will be removed and the 32.5% tax rate will be reduced to 30%. Individuals will be taxed at a marginal tax rate of 30% for income earned between $45,000 and $200,000. As a reminder, the low and middle income tax offset no longer applies from the 1 July 2022 onwards.
For businesses, the Government announced:
- From 1 July 2023, the instant asset write off will be available to small businesses with an aggregated turnover of less than $10 million on the purchase of eligible assets below $20,000. Currently, there are no thresholds and businesses (with an aggregated turnover of less than $5 billion) can claim the full value of eligible depreciating assets.
- The small business energy incentive will be available to businesses with a turnover of less than $50 million which allows an additional 20% deduction on certain expenditure towards electrification and more efficient use of energy.
- Payday Super which will commence from 1 July 2026 following which employers will be required to make superannuation payments at the same time as their salary and wage payments.
- A lodgment penalty amnesty program for small businesses with an aggregated 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 28 February 2022.
The Government has also announced targeted tax incentives towards housing with increased capital allowance deductions for eligible build-to-rent projects and concessional tax treatment for non-residents on eligible fund payments from managed investment trusts on income from new constructed residential build-to-rent projects.
The Moore Australia National Tax Committee have analysed the budget papers and prepared an analysis of the major Budget announcements.
A full report of the Budget will follow in due course.