Budget 2024: What’s in it for small businesses?

 

Treasurer Jim Chalmers has handed down the 2024 Federal Budget. We unpack what it means for the small business community.

 

Instant Asset Write-Off extended

The Budget confirms an extension of the $20,000 Instant Asset Write-Off (IAWO) for another year until 30 June 2025.

Available for small businesses with aggregated turnover below $10 million, the extension of the IAWO for a further 12 months is a plus for small enterprises. It allows an investment in new equipment to improve productivity and competitiveness, while matching the tax saving with the timing of the outgoing.

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

However, representatives from the small business sector, including Cameron Poolman, CEO of OnDeck Australia, expressed disappointment that the upper limit remains low.

“Realistically, $20,000 doesn’t cover the cost of many items of machinery, and it certainly doesn’t match the price of new cars. So, it’s not a measure that will allow small businesses to upgrade their fleet and enjoy savings in fuel efficiency,” said Cameron.

“I would have liked to see an upper limit closer to $50,000, which would have given small businesses meaningful opportunities to invest in their enterprise,” Cameron added.

 

$325 energy savings

From 1 July 2024, eligible small businesses will receive an annual rebate of $325 on their electricity bills. In practical terms this will mean a quarterly saving of $81.25.

The energy saving is expected to benefit around 1 million small businesses[1].

“Any saving on power bills is welcomed by small businesses,” said Cameron. “But I’m sure small business owners would agree that the spiralling cost of electricity means an annual saving of $325 will not make a significant difference to operating expenses.”

 

A $22.7 billion Future Made in Australia package

The Budget devotes $22.7 billion to the Future Made in Australia (FMIA) initiative, which is essentially a mix of subsidies, tax breaks and a reduction in red tape designed to support ‘clean’ technology across several key industries.

“The FMIA initiative may offer opportunities for small businesses to become involved,” said Cameron. “But the concern is that the big mining companies are likely to be among the key beneficiaries.”

 

Cutting red tape

From 1 July 2024, the Government will abolish 457 nuisance tariffs in what is described as “the largest unilateral tariff reform” in two decades[2].

This will simplify Australia’s trade system and cut compliance costs for small businesses, which are particularly burdened by complexity of the tariff system.

 

Building cyber resilience

The Budget aims to help small businesses stay secure online through a range of measures including:

• A Cyber Wardens program to provide free, online training for small business owners and their staff to drive a cyber safe mindset
• A Small Business Cyber Resilience Service to help small businesses build their cyber resilience and provide support when affected by a cyber incident
• A Cyber Health Check online interactive tool to enable small businesses to self-assess their cyber security maturity.

The Government is also developing a ransomware playbook to provide guidance to businesses and individuals on how to prepare for, respond to and recover from a ransomware or cyber extortion incident.

 

Supporting the mental wellbeing of business owners

This Budget invests $10.8 million to support the mental health and financial wellbeing of small business owners by extending the NewAccess for Small Business Owners program, which provides tailored, free and confidential mental health support to small business owners.

It will also extend the Small Business Debt Helpline, a national, free and confidential phone-based financial counselling service for small business owners.

“It’s good to see the Government recognises that small business owners face unique challenges, with their mental health connected to the financial health of their enterprise,” said Cameron. “We know from OnDeck’s own research that small business owners rarely take time out from their business, and I encourage all business owners to explore ways to take time out and recharge from the rigours of running a business.”

 

Tax savings for over 13 million Australians

The Stage 3 tax cuts that launch from 1 July 2024 are not directed at small business, however, Cameron says the increase in disposable income across 13.6 million Australians[3] is likely to be a plus for small enterprises.

“Putting money back in the hands of Australians can filter through to increased revenue for small businesses, many of which are feeling the pinch of reduced household spending,” notes Cameron.  “If we can avoid further hikes in the cash rate, the tax cuts have the potential to bring an indirect windfall to the small business community.”

 

 

 

 

 

OnDeck cannot give tax advice. Any tax considerations outlined in this article are general statements, based on an interpretation of current tax laws, and do not constitute tax advice. As such, you should not place reliance on any such taxation considerations as a basis for making your decision with respect to the product.

As the tax implications of investing in a OnDeck product can impact individual situations differently, you should seek specific tax advice from a registered tax agent or registered tax (financial) adviser about any liabilities, obligations or claim entitlements that arise, or could arise, under a taxation law. 

 

[1] https://budget.gov.au/content/03-future-made.htm#m9

[2] https://budget.gov.au/content/factsheets/download/factsheet-sml-bus.pdf

[3] https://taxcuts.gov.au/