ASBFEO points out important taxation changes for 2023-24

NEW instant asset write-off thresholds, updated tax rules, increased superannuation payments and a rise in the minimum wage are among changes coming into effect on July 1, according to Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson.

“It is essential that small business owners and managers understand these changes,” Mr Billson said. “They should check their payroll and accounting systems have been updated and they should talk to trusted advisers like accountants and bookkeepers. It is important to get this right.

“With so many pressures on busy small business leaders as we near the end of the financial year it can be easy to overlook new and changing rules. However, there are significant changes that cannot be put aside.

“The end of the financial year is also a good time to not just have a stocktake but to take stock of the health of your business and yourself and to make use of the many helpful resources, tools and checklists available, including on our website www.asbfeo.gov.au.” 

The ASBFEO has highlighted some of the more important changes. It is not a complete list and some changes that may affect a business are specific to industry sectors or states. 

Instant asset write-off

The instant asset write-off threshold will be $20,000 on a per asset basis for 12 months from  July 1 for eligible small businesses with a turnover up to $10 million.

It will replace the previous arrangement introduced during the COVID pandemic which expires on June 30 and provided a write-off of eligible assets costing up to $150,000 that were first used or installed ready for use between March 2020 and 30 June 2023.

From July 1, assets valued at more than $20,000 (which cannot be immediately deducted) can be placed into the small business simplified depreciation pool and depreciated at 15 percent in the first income year and 30 percent each income year thereafter.

Small businesses have until June 30 to use the 20 percent tax deduction for investing in digital operations such as new equipment like technology, cloud-computing, e-invoicing or cyber security. The technology investment boost will apply to investments made between  March 29, 2022 and June 30, 2023 but to be eligible the item must be first used or installed ready for use by June 30.

[For more information; https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/Small-business-technology-investment-boost/?=Redirected_Technologyboost ]

A skills and training boost for training through a registered external training provider for new and existing employees applies between March 29, 2022 and June 30, 2024. [For more information: https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/Small-business-skills-and-training-boost/ ]

Small businesses may also be eligible for a range of tax deductions and concessions that are available before June 30 or from July 1 and should check with their trusted advisers or the Tax Office.  [ https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/  ]

Small Business Energy Incentive

A tax incentive worth up to $20,000 will provide an additional 20 percent depreciation for eligible assets that support electrification and more efficient use of energy by small businesses.

The bonus will be provided to businesses with an annual turnover of less than $50 million and is aimed at helping them save on energy bills by making investments like electrifying their heating and cooling systems, upgrading to more efficient fridges and induction cooktops, and installing batteries and heat pumps.

Under the scheme, which is pending passage through Parliament, up to $100,000 of total spending will be eligible with the maximum bonus tax deduction being $20,000 per business. Eligible assets or upgrades will need to be first used or installed ready for use between July 1, 2023 and June 30, 2024.

Super guarantee

The super guarantee (SG) rate will increase from 10.5 percent to 11 percent for all employees eligible to receive superannuation.

Small business owners will need to use the new rate to calculate super on payments made to employees on or after July 1, even if some or all of the pay period is for work done before July 1. The SG rate is legislated to increase to 12 percent by 2025.

Employers are responsible for checking their payroll and accounting systems have been updated to ensure they correctly calculate their employee’s super guarantee entitlement. Payments must be received by the employee’s super fund by July 28.

[For more information: https://www.ato.gov.au/business/super-for-employers/paying-super-contributions/how-much-super-to-pay/ ]

National Minimum Wage and award rate

The National Minimum Wage will increase to $882.80 per week, or $23.23 per hour.

Award rates of pay will increase by 5.75 percent.

Both changes are effective from the first full pay period starting on or after July 1 and more information is available on the Fair Work Ombudsman’s website: https://www.fairwork.gov.au/newsroom/news/awr-2023   

Small businesses can sign up to email updates from the Fair Work Ombudsman and can use its Pay and Conditions Tool and pay guides.

The Fair Work Commission has also made a decision to increase minimum wages by 15 percent for some employees working in aged care from June 30. This is separate to the annual wage review.

[For more information: https://www.fairwork.gov.au/newsroom/news/15-per-cent-wage-increase-aged-care-sector ]

PAYG and GST uplift rate

The Australian Government will reduce the PAYG and GST uplift on quarterly payments from what would have been 12 percent to 6 percent for the 2023-24 income year in a move that should help assist cash flow for small businesses.

Single Touch Payroll

Employers are required to finalise employees’ Single Touch Payroll (STP) data by July 14. The Tax Office advises small business owners to double check they are finalising STP data for the 2022-23 financial year.

It also says employers are required to report pay as you go (PAYG) withholding information every time they pay employees through Single Touch Payroll. From July 1,these amounts reported through STP will be used to pre-fill labels W1 and W2 in activity statements in ATO online services.

[For more information: https://www.ato.gov.au/Business/Single-Touch-Payroll/ATO-PAYG-withholding-pre-fill-for-activity-statements/ ]

Paid Parental Leave scheme

The entitlement of 18 weeks’ paid parental leave pay will be combined with the Dad and Partner Pay entitlement of two weeks’ pay. This means partnered couples will be able to claim up to 20 weeks of paid parental leave between them. Parents who are single at the time of their claim can access the full 20 weeks.

These changes affect employees whose baby is born or placed in their care on or after July 1.

[For more information: https://www.fairwork.gov.au/newsroom/news/changes-to-the-paid-parental-leave-scheme 2023 ]

Temporary Skilled Migration Income Threshold

The Temporary Skilled Migration Income Threshold (TSMIT) will increase from $53,900 to $70,000. This applies to employers who wish to nominate workers for subclass 482, 186 and 187 visas and they must meet certain salary and employment condition requirements to ensure overseas workers are paid no less than an Australian worker doing the same work in the same location, known as the annual market salary rate (AMSR).\ 

Other resources

A useful end of financial year checklist for small business is available at: https://business.gov.au/finance/yearly-financial-tasks/end-of-financial-year-checklist

The Tax Office provides a Tax Time Tool Kit to assist small business to prepare their tax returns, which includes a directory of links to find information, tools, calculators and other support and resources. It will be available in early July at www.ato.gov.au

The ATO also provides a cash flow coaching kit, which is available at: https://www.ato.gov.au/Tax-professionals/Support-and-communication/In-detail/Cash-Flow-Coaching-Kit/

www.asbfeo.gov.au

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