What do you think? Budget blooms or blows
Written by Darren Mills & Pam Kloosterman
On 9 May the Federal Labor government announced their 2023/24 budget. In this article we are going to give you a wrap up of the budget announcements we feel will impact our clients the most.
Individuals and Families
Energy price plan relief: The Energy Bill Relief Fund will provide targeted energy bill relief to eligible households and small business customers. This includes pensioners, Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients and small business customers of electricity retailers.
Household energy upgrade fund: A Household Energy Upgrades Fund will be established to support home upgrades that improve energy performance. The Government is not giving out cash for upgrades but providing $1bn to the Clean Energy Finance Corporation to provide low-cost finance and mortgages in partnership with private financial institutions for home upgrades that save energy. We are already seeing lower interest rates being offered by banks for energy efficient products. This will likely be discounted further and expand to a broader range of products and buildings following this announcement.
Incentive to provide Medicare bulk billing to concession card holders and children: From 2023-24 the bulk billing incentive benefits for consultations for Commonwealth concession card holders and patients aged under 16 years of age will be tripled.
Government Payments
Increasing Centrelink Payments: The base rate of working age and student payments will increase by $40 per fortnight from 20 September 2023. The increase applies to the following payments:
JobSeeker Payment
Youth Allowance
Parenting Payment (Partnered)
Austudy
ABSTUDY
Disability Support Pension (Youth), and Special Benefit.
Single parent payment increase: From 20 September 2023, (subject to the passage of legislation), single parents will no longer have to transfer to JobSeeker when their youngest child turns eight. Instead, they will continue to receive the higher support, with a current base rate of $922.10 per fortnight until their youngest child turns 14. As a result, eligible single parents currently on JobSeeker will receive an increase to payments of $176.90 per fortnight. Single parents moving to Parenting Payment (Single) will also benefit from more generous earning arrangements compared to JobSeeker. Eligible single parents with one child will be able to earn an extra $569.10 per fortnight, plus an extra $24.60 per additional child, before their payment stops.
Increased rent assistance: The maximum rates of the Commonwealth Rent Assistance (CRA) allowances will increase by 15% from 20 September 2023.
Scheme enabling pensioners to earn more extended: The measure enabling age pensioners and veterans to earn more money before their pension is reduced has been extended for another 6 months, until 31 December 2023. Under this measure, pensioners can earn up to $11,800 before their pension is reduced.
In-home aged care increase: An additional 9,500 Home Care Packages will be available in 2023-24.
Access to home guarantee scheme expanded to friends and siblings: The Government’s Home Guarantee Scheme will be expanded to joint applications from “friends, siblings, and other family members” and to those who have not owned a home for at least 10 years
Superannuation and Investors
30% tax on super earnings above $3m: Confirmed 30% tax on the proportion of super earnings on the balance above $3 million. That is an extra 15% on the current rate. The total superannuation balance (TSB) will include amounts in retirement phase pensions.
Clarifying the non-arm’s length income rules for super funds: The non-arm’s length income (NALI) rules prevent superannuation trustees artificially increasing the balance of the fund, and accessing preferential tax treatment on the higher amount, by failing to recognise expenses incurred by the fund provided by a related party at a reduced rate. For example, your brother is a qualified accountant and does all of your SMSF’s accounting work for free (that he would normally charge $5k for).
Business and Employers
$20,000 small business instant asset write-off: From 1 July 2023 to 30 June 2024 small businesses, with an aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of 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.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will continue to be suspended until 30 June 2024.
Payday super - Increasing payment frequency of employee super: From 1 July 2026, employers will be required to pay their employees’ super guarantee (SG) entitlements on the same day that they pay salary and wages. Currently, SG is paid quarterly.
$20,000 small business incentives for energy efficiency: The Small Business Energy Incentive provides an additional deduction of 20% of the cost of eligible depreciating assets that support electrification and more efficient use of energy. Up to $100,000 of total expenditure will be eligible, with a maximum bonus deduction of $20,000.
The incentive is available to small and medium businesses with aggregated annual turnover of less than $50 million. Is only available between 1 July 2023 and 30 June 2024.
Lowering tax instalments for small business: Normally, GST and PAYG instalment amounts are adjusted using a GDP adjustment or uplift. For 2023-24, the Government has set the uplift factor to 6% instead of the 12% rate that would have applied.
Hybrid cars excluded from FBT exemption for electric cars: Plug-in hybrid electric cars will be excluded from the fringe benefits tax (FBT) exemption for eligible electric cars from 1 April 2025. Arrangements entered into between 1 July 2022 and 31 March 2025 can remain eligible for the FBT exemption as long as the exemption applied to the car before 1 April 2025 and the employer has a financially binding commitment to continue providing private use of the car on and after this date.
Heavy vehicle user charge increases from 2023-24: The Heavy Vehicle Road User Charge rate from 27.2 cents per litre of diesel by 6% per year over 3 years from 2023-24 to 32.4 cents per litre in 2025-26.
15% pay increase for Aged Care Workers From 2022-23: $515m over 5 years will be provided to fund the outcome of the Fair Work Commission’s decision on the Aged Care Work Value Case to increase award wages by 15% from 30 June 2023. This affects many aged care workers including
Registered nurses
Enrolled nurses
Assistants in nursing
Personal care workers
Home care workers
Recreational activity officers
and some head chefs and cooks.
The increase will be partially offset by a temporary reduction in the residential aged care provision ratio from 78 places to 60.1 places per 1,000 people aged over 70 years.
Questions?
If you need assistance navigating any of these changes, please contact us on 9841 1200
A Coffee with… Evie Milne
This year Lincolns introduced a new Internship program. The program is for students studying accounting at university wanting some experience in public practice. For the duration of their study interns will work part time with Lincolns and get a taste of all the areas of the office including reception, client support, bookkeeping, audit, super and tax. The goal of the internship is that our interns will complete their degree with the experience to jump straight into the corporate world at Lincolns and along the way, potentially, earn a couple of credits towards their degree!
Evie Milne is our lucky first intern. She has only been with us 3 months, but we caught up with her to find out how it is all going so far…