How The 2023-24 Federal Budget Impacts Small Businesses

Treasurer Jim Chalmers unveiled the Labor Government’s second budget on Tuesday, projecting a significant $4 billion surplus for the upcoming fiscal year, which would mark the first surplus in 15 years. Against the backdrop of heightened inflation and increasing living expenses, people are eager to learn about the budget’s potential benefits. Business Foundations has compiled an overview of the key provisions that will directly impact small businesses in the 2023-24 Federal Budget.

Electrification of Small Businesses

Small Businesses with an annual turnover of less than $50 million will be eligible to participate in the Federal Government’s “Energy Incentive”. This allows businesses to claim a 20% tax deduction on their shift towards the electrification of their business. Eligible expenses can include adopting electrified heating and cooling, more energy-efficient appliances, induction cooktops, battery installations, and heat pumps. The maximum claim allowed is $20,000, which means businesses can potentially receive tax benefits on up to $100,000 worth of eligible expenditures. The “Energy Incentive” aims to assist around 3.8 million small and medium-sized businesses and is estimated to cost the Government $314 million over the next four years.

Electricity Bills

To account for the rising cost of living and soaring electricity prices, the Federal Government will be delivering a $650 electricity credit to small business premises. In addition, $500 in energy bill relief will be available to pensioners, veterans, concession card holders, and people on government support payments.

For those in Western Australia, the State Budget is also delivering a $650 electricity credit for small business premises, and a $400 electricity credit for households. If eligible for the Federal Government’s electricity credits, these can be combined with the State Government’s initiative for a maximum of $1300 in credits, depending on eligibility.

Instant Asset Write-Off

Small businesses can take advantage of the $20,000 instant asset write-off, which remains in effect until the middle of next year. This provision enables businesses to deduct the complete cost of assets worth up to $20,000 that were installed or prepared for use before the specified date.

The 2023-24 Federal Budget is set to support small businesses and foster economic growth in the upcoming financial year. With the challenges posed by inflation, it is hoped the electricity bill relief measures, “Energy Incentive”, and the ongoing $20,000 instant asset write-off will provide some relief to small business owners.