Superannuation

Limiting superannuation tax concession

Previously announced on 28 February 2023, earnings relating to individual super balances over $3 million will effectively be taxed at 30% instead of the concessional 15%. The measure is proposed to commence on 1 July 2025 and apply from the 2025–26 financial year.

Under the current proposal:

• The $3m cap is un-indexed, in contrast to the transfer balance cap;
• Unrealised capital gains will be included in the calculation.

Payday super

Employers will be required to pay their employees’ super guarantee entitlements on the same day that salary & wages are paid.

The delayed commencement date of 1 July 2026 is to enable businesses, the ATO, superannuation funds and payroll processing to adapt to the cash-flow and reporting impacts that this measure will have. The change should also result in a decrease in unpaid super and a decrease in director’s penalty notices in respect of unpaid super.

Small Businesses

$20,000 Instant asset write-off threshold 

Temporary Full Expensing rules are ending on 30 June 2023. Small businesses with aggregated turnover of less than $10 million will be able to immediately write off eligible depreciating assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. Without this change, the threshold would have reverted to the standard legislated amount of $1,000.

Small Business Energy Incentive

Businesses with an aggregated turnover of less than $50 million can claim an additional deduction of 20% of the cost of eligible depreciating assets that support electrification and more efficient use of energy, such as energy efficient fridges, heat pumps and electric heating or cooling systems. The incentive is capped at $100,000, i.e. the maximum additional deduction is $20,000. Eligible assets or upgrades must be first used or installed ready for use between 1 July 2023 and 30 June 2024.

Tax Compliance

Extending the personal income tax compliance program

More funding to the ATO and Treasury to extend the personal income tax compliance program for

two years from 1 July 2025 and expand its scope from 1 July 2023, with focus on issues such as overclaiming of deductions and incorrect reporting of income, and risk areas such as short-term rental properties.

Extending the GST compliance program

The Government will provide funding and aid to the ATO over four years from 1 July 2023 to continue activities that promote compliance with the Goods and Services Tax (GST). This measure will ensure that businesses meet their GST obligations and help the ATO develop more sophisticated analytical tools to target emerging risks. 

Others

Build-To-Rent incentives

To address the issue of housing availability and affordability, the Government announced changes to the Build-To-Rent (BTR) program. For eligible construction projects commencing after 7:30 PM AEST on 9 May 2023, the measure will: 

• increase the rate for the capital works deduction from 2.5% to 4%; and
• reduce the final withholding tax (WHT) rate on eligible fund payments from managed investment trusts (MITs) from 30% to 15%. 

Eligible BTR developments must consist of:

• 50 or more apartments in one development; or
• dwellings made available for rent to the general public.

The dwellings must be retained under single ownership for at least 10 years before being able to be sold and landlords must offer a lease term of at least 3 years for each dwelling.

What’s NOT in the Budget

• No changes to personal income tax rates and thresholds. Stage 3 Personal tax cuts are due to take effect from 1 July 2024, and income between $45,001 and $200,000 will be taxed at 30% from the 2024-25 financial year.

• Low-and-middle-income tax offset (LMITO with maximum amount of $1,500) expired on 30 June 2022. No extension was announced in this Budget.

How can we help?

If you would like to discuss how the budget may impact your business, investments, or tax affairs, please contact our office.