New legislation moving through the Australian Senate will increase the instant asset write-off threshold to $20,000. This change aligns with the 2023–24 income year, providing consistency for small businesses in understanding which new assets can be immediately deducted.
Eligibility Criteria
To be eligible for the instant asset write-off, the following conditions must be met:
The asset must be installed or ready to use between 1 July 2024 and 30 June 2025.
The asset must cost less than $20,000.
The annual aggregated turnover of the business must be less than $10 million.
The $20,000 threshold applies on a per-asset basis, allowing multiple assets to be written off instantly if each asset costs under $20,000.
Assets Over the Threshold
Assets valued at $20,000 or more cannot be immediately deducted. Instead, they can be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
Next Steps
Small businesses can continue to immediately deduct eligible assets using the instant asset write-off. This amendment is intended to improve cash flow compared to deducting assets in the small business depreciation pool and reduce record-keeping over time.
The provisions preventing small businesses from re-entering the simplified depreciation regime (lockout rules) for five years if they opt out will remain suspended until 30 June 2025.
Please contact our office if you have any queries regarding these announcements.
The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024.
Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion. As reflected in the Budget, the government’s main priorities are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.
The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.
The Budget also includes various amendments to previously announced measures, as well as several income tax measures that have already been enacted before the Budget announcement, including:
The revised stage 3 personal income tax cuts (enacted by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Act No 3 of 2024)).
Medicare levy and surcharge threshold changes (enacted by the Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Act No 4 of 2024)).
A specific exemption for Australian plantation forestry entities from the new earnings-based rules introduced as part of thin capitalisation reforms (enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 (Act No 23 of 2024)).
These enacted measures have not been discussed in detail in this report.
The government anticipates that the tax measures proposed will collectively improve the Budget position by $3.1 billion over a five-year period to 2027–28.
The tax, superannuation and social security highlights are set out below.
Income Tax
The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025.
A critical minerals production tax incentive will be available from 2027–28 to 2040–41 to support downstream refining and processing of critical minerals.
A hydrogen production tax incentive will be available to producers of renewable hydrogen from 2027–28 to 2040–41.
The minimum content length requirements and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed.
A new penalty will be introduced from 1 July 2026 for taxpayers with more than $1 billion in annual global turnover found to have mischaracterised or undervalued royalty payments.
The Labor government’s 2022–23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued.
The start date of a 2023–24 Budget measure to expand the scope of the Pt IVA general anti-avoidance rule will be deferred to income years commencing on or after assent of enabling legislation.
Income tax exemptions for World Rugby and related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s).
The deductible gift recipients list is to be updated.
Social Security
Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025.
Carer payment recipients will have greater flexibility with their participation requirements.
Eligibility for the higher rate of Jobseeker payment will be extended to single recipients who can partially work zero to 14 hours per week.
The maximum rates of the Commonwealth Rent Assistance will increase by 10% from 20 September 2024.
Funding will be provided to implement a social security means test treatment for military invalidity payments affected by the Full Federal Court’s decision of FC of T v Douglas 2020 ATC ¶20-773; [2020] FCAFC 220.
Funding will be provided to enable Australia to enter into a bilateral social security agreement with Uruguay.
Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.
Superannuation
Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025.
The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
Tax Administration
The ATO will be given statutory discretion not to use a taxpayer’s refund to offset old tax debts on hold.
Effective 1 June 2023, the indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index.
The Department of Home Affairs and the ATO will conduct a pilot program for matching the income and employment data of migrant workers.
A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.
The ATO will have additional time to notify a taxpayer if it intends to retain a business activity statement refund for further investigation.
The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed.
GST
Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.
Excise and Customs Duty
Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
The start dates for certain components of a measure to streamline excise administration for fuel and alcohol announced in the Coalition government’s 2022–23 Budget will be deferred.
Get in touch to discuss how the Budget announcements impact you.
The days of deciding on a tax strategy at the start of the year and then forgetting about it are gone. As taxpayers and tax advisers, we must be nimble, flexible, and aware of changes. That’s why regular tax-planning sessions are so important.
Is your business meeting the right tax compliance goals?
Are there tax changes to be aware of?
And is your tax planning delivering the best results for you and your company?
The need for regular tax-planning conversations
As your accountant and tax adviser, we want to help you get the best outcomes from your tax planning. In the current environment, that’s difficult to achieve if we only speak to you about tax on an annual basis.
The frequency of these tax planning chats will depend on the size of your business and the complexity of your structure and shareholder set-up. But we should talk to you at least once every quarter about the tweaks and changes that are needed in your plan.
In these tax planning sessions, we can:
Update you on the latest tax measures – We’ll tell you which personal and business taxes you need to be aware of.
Tell you how these measures affect you – We’ll run you through the implications of any changes or available business reliefs. We can show you the impact on your tax returns for the coming periods and what this means for your tax costs and your cash flow at large.
Listen to your evolving plans for the business – We’ll also ask you about your future business plans and what you want to achieve in the coming quarter. When we know your aims, we’ll do our best to help you develop a business strategy that’s closely aligned with your tax-planning strategy.
Suggest planning measures to benefit you and your business – When we know your business goals, we can help you plan your tax more effectively. For example, plans to invest in research and development (R&D).
Update your tax plan for the year – With the outputs from a productive tax-planning session, we’ll come up with a refreshed and updated tax plan for the coming period (and beyond). It’s the best way to stay on top while delivering the best in tax compliance and tax efficiency.
Talk to us about booking a tax planning session.
We’ll always do our best to help you plan your tax liabilities and keep the business in a positive cash flow position.
Book a tax-planning conversation with us, and let’s start improving your strategy.
