The release of the 2023-24 Federal Budget has generated considerable interest and debate, marking a historic moment with the first budget surplus in 15 years – a notable $4.2 billion. This achievement has been fueled by a surge in corporate and individual tax receipts, driven by high commodity prices, inflation, and high employment. However, it is essential to note the transient nature of these gains, with anticipated deficits of $13.9 billion in 2023-24 and $35.1 billion in 2024-25.

Social Initiatives Take Center Stage

The budget was characterized by a significant focus on social initiatives. Some of the key provisions include:

  1. Energy Bill Relief: Households and small businesses are set to benefit from measures designed to ease the burden of energy costs.
  2. Bulk Billing Incentives: To encourage doctors to offer bulk billing, the budget triples the incentives for children under 16, pensioners, and other Commonwealth card holders.
  3. Rent and Income Support: There are planned increases to Commonwealth rent assistance, JobSeeker, and other income support payments.
  4. Single Parenting Payment: The budget expands access to the single parenting payment, providing additional support for single parents.

Tax Cuts and Small Business Support

In the realm of taxation, the stage 3 tax cuts remain in place, set to take effect from 1 July 2024. This change simplifies the tax brackets by collapsing the 32.5% and 37% rates into a single 30% rate for those earning between $45,001 and $200,000.

Small businesses also received attention in this budget. The instant asset write-off will allow businesses to deduct the cost of multiple assets of up to $20,000 in the year of purchase, thereby stimulating investment in business growth.

Notable Omissions: A Look at What Wasn’t Included

However, several key issues were conspicuously absent from the budget. The loss carry back rules for companies and the simplification of Division 7A were not mentioned, suggesting potential changes in these areas.

The loss carry back rules, set to expire on 30 June 2023, allow eligible companies to apply tax losses against taxable profits made in certain previous income years. The Division 7A rules, which capture situations where shareholders access company profits in the form of loans, payments, or the forgiveness of debts, have been in a state of uncertainty since proposed changes were deferred multiple times.

The Budget also did not refer to the Skills and Training Boost or the Technology Investment Boost. These measures, announced by the previous Government, would provide a bonus deduction equal to 20% of qualifying expenditure if the legislation containing these measures is passed in its current form.

Final Thoughts

The 2023-24 Australian Federal Budget is a mixed bag of financial opportunities and challenges. As always, understanding the budget and its potential impact on your personal and business financial position can be a complex task. At MSI Taylor, we are committed to helping you navigate these financial waters.

Whether you need help understanding the potential impacts of the budget, want to take advantage of any budget measures, or need to protect your position, our team is ready to assist.

Please feel free to download our budget guide here for more detailed information.