Treasurer Jim Chalmers has handed down the 2024-25 Federal Budget with various tax-related measures concerning SMEs.
On Tuesday 14 May 2024, Treasurer Jim Chalmers handed down the 2024-25 Federal Budget, his 3rd Budget. The major SME business tax-related measures announced in the Budget include the following.
Instant asset write-off for small businesses extended
The Government will extend the instant asset write-off concession for another 12 months. This will allow small businesses with turnovers capped at $10 million to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose between 1 July 2024 and 30 June 2025.
Depreciating assets that are first used or installed ready for use for a taxable purpose on or after 1 July 2023 will be subject to the $20,000 threshold. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. 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.
In terms of black letter law, the increased instant asset write-off concession ceased on 30 June 2023. However, the Government announced in the 2023-24 Federal Budget (ie last year’s) that it would be extended by one year, ie to finish on 30 June 2024. That measure was contained in a Bill which is currently before Parliament (ie it is not yet law). It passed the Senate with one amendment (which extended the coverage to businesses above $50m and increased the threshold from $20,000 to $30,000) which was subsequently voted down in the House. The Bill has now returned to the Senate for further consideration.
Changes to foreign resident CGT rules
The Government will amend the following areas of CGT as it applies to foreign residents, ie it will:
- clarify and broaden the types of assets that foreign residents will be liable for;
- amend the point-in-time principal asset test to a 365-day testing period;
- and require foreign residents disposing of shares and other membership interests exceeding $20m in value to notify the ATO, prior to the transaction being executed.
Energy relief payments extended
The Government will provide $3.5 billion over 3 years from 2023-24 to extend and expand the Energy Bill Relief Fund to provide a $300 rebate to all Australian households and a $325 rebate to eligible small businesses on 2024-25 energy bills.
Future Made in Australia incentives
The Government will provide 2 tax-related incentives relating to its Future Made in Australia program: the Critical Minerals Production tax incentive and the Hydrogen Production tax incentive. There are no specific details in the Budget Papers as to how these incentives will be implemented.
BAS notification period extended
The Government will extend the time the ATO has to notify a taxpayer if it intends to retain a BAS refund for further investigation. The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.
More ATO funding; compliance programs extended
The Government will provide $187.0m over 4 years from 1 July 2024 to the ATO to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation systems. Funding includes:
- $78.7m for upgrades to information and communications technologies to enable the ATO to identify and block suspicious activity in real time;
- $83.5m for a new compliance taskforce to recover lost revenue and intervene when attempts to obtain fraudulent refunds are made;
- $24.8m to improve the ATO’s management and governance of its counter-fraud activities, including improving how the ATO assists individuals harmed by fraud.
- In addition, the government will extend both the ATO Shadow Economy Compliance Program for 2 years from 1 July 2026 and the ATO Tax Avoidance Taskforce for 2 years, also from 1 July 2026.
These measures are expected to increase receipts by $1.9 bn and $2.4bn respectively.
Funding for new Administration Review Tribunal
The Government will provide $1.0bn over 5 years from 2023-24 (with $210.8m per year ongoing from 2028-29 and an additional $194.2m from 2028-29 to 2035-36) to establish and support the sustainable operation of the new Administrative Review Tribunal (ART), replacing the AAT. Some of the funding will be used to clear court backlogs associated with high numbers of applications for judicial review of migration decisions.
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