Federal Budget highlights for small businesses

1. Small business energy incentives

The government had previously announced the Small Business Energy Incentive, which aims to help small businesses with the upfront costs of investing in energy-efficient equipment. The measure will provide businesses with an annual turnover of less than $50 million with an additional 20% deduction on spending that supports electrification and more efficient use of energy. 

Up to $100,000 will be available as part of this new tax incentive, with a maximum bonus tax deduction of $20,000 per business. 

Although the full range of eligible assets is yet to be finalised, some investments have already been earmarked as being eligible, including electric heating, cooling systems, energy efficient fridges, induction cooktops, batteries and heat pumps. We know that electric vehicles, renewable electricity generation assets, capital works and assets that are not connected to the electricity grid or use fossil fuels will not be included. 

And on the topic of energy benefits, an Energy Bill Relief Fund to support eligible households and small business customers of electricity retailers has been announced. Amounts will vary from state to state and will range from $325 to $650. 

Beau Bertoli, Chief Revenue Officer and Co-Founder at Prospa, said that “the government’s decision to deduct up to $20,000 in tax for SMEs investing in energy efficient equipment, combined with the announcement of energy rebates for over one million SMEs, will … go some way towards offsetting the forecasted electricity and gas price spikes of five to 18 per cent”. 

2. Instant asset write-off extension 

The instant asset write-off threshold has been temporarily increased to $20,000 and extended until the end of the 2023-2024 financial year. Small businesses with a turnover of up to $10 million will be able to immediately deduct the full cost of eligible assets that cost less than $20,000 and are first used or installed ready for use between 1 July 2023 and 30 June 2024. 

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. 

“The temporary increase to the $20,000 instant asset write-off threshold is a welcome measure for Aussie small businesses, enabling them to reinvest in their businesses and grow,” said Bertoli. “However, the government will need to do more to ensure the small business community has the resources it needs not only to survive but thrive in today’s climate.” 

3. Support against cyber threats

Matthew Addison, Chair of the Council of Small Business Organisations Australia (COSBOA), was pleased to see support in the Budget for its Cyber Wardens program, with $23.4 million allocated in the Budget to help businesses to train in-house cyber wardens. 

The measure aims to help mitigate and reduce the harm associated with cyberattacks on small businesses. 

Addison said the government support “provides [the] ability to make a difference in the cybersecurity behaviour of at least 15,000 small businesses” and that COSBOA has already run a pilot program. 

“It’s pleasing to see the government’s commitment to bolster SMEs in-house capabilities to protect their businesses from cyberattacks,” added Bertoli. 

4. Boost to small business cash flow

In a move designed to improve cash flow for small businesses and help them manage income tax and GST liabilities, the government plans to halve the increase in quarterly tax instalments for GST and income tax in the 2023-2024 financial year. 

Instalments will increase by 6% instead of 12%. This is expected to benefit approximately 2.1 million eligible small businesses. 

5. Tax time assistance 

Other measures to help reduce the financial administration burden on small businesses include allowing more time to amend tax returns (from 1 July 2025 small business owners will have up to four years to amend their return), trialling an independent review for small businesses with turnover between $10 million and $50 million who are subject to an ATO audit, and expanding access to advice through a tax clinic program (TAFE will be used in regional areas).  

In a nod to those still rebuilding after COVID, there will be a lodgement penalty amnesty program for small businesses with a turnover of less than $10 million to “encourage them to re-engage with the tax system”. Penalties will be waived 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 29 February 2022. 

6. Assistance for start-ups

The government has allocated $392 million to an Industry Growth Program which, according to the Minister for Industry and Science Ed Husic, will “offer advice and grants to start-ups and small-to-medium businesses to help them commercialise their ideas and grow”. 

Eligible projects should match the priority funding areas of the National Reconstruction Fund, including renewables and low emissions technologies, medical science, transport, resources and the agriculture, forestry and fisheries sectors. 

For more information about the Federal Budget, visit the Federal Budget website.