Federal Budget 2023 delivered a $4.2bn surplus, and focused heavily on relief – targeting energy bills and the cost of healthcare in a big way.
Our analysis is aimed at helping you prepare for any implications that may affect your business.
Personal taxation
No changes were announced to personal taxation apart from the annual indexation of the Medicare Levy threshold, which ensures that low income individuals continue to be exempt from paying the Medicare levy. This takes the family threshold above $40,000 for the first time, to $40,939 plus $3,760 for each dependent child, and the seniors threshold to $53,406, while the single threshold increases to $24,276.
| Current | Proposed |
Single | $23,365 | $24,276 |
Single, senior or pensioner | $36,925 | $38,365 |
Family | $39,402 | $40,939 |
Family, senior or pensioner | $51,401 | $53,406 |
Phase 3 Tax cuts stay – and will be needed if our forecasts are accurate, while the Low and Middle Income Tax Offset (LMITO) will end as expected.
Cost of Living Measures
Those on JobSeeker will receive an increase in their payments of $40 a fortnight from 20 September this year, while those over 55 on JobSeeker will receive an increase of $92.10 a fortnight, which is currently reserved for those over 60.
Also in September, eligible single parents will receive the single rate of Parenting Payment until their youngest child turns 14, which is currently only available until that child is 8 years old. The current base rate of Parenting Payment (Single) is $922.10 per fortnight, compared to the JobSeeker Payment base rate of $745.20 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.
The maximum rates of Commonwealth Rent Assistance will also increase by 15 per cent, a measure that will assist a wide range of social security recipients.
Superannuation
At the other end of the scale, very high superannuation balances will attract a higher rate of tax from 1 July 2025. Earnings on balances exceeding $3 million will pay tax on earnings at a rate of 30 per cent, 15% higher than the current rate of 15%. Earnings on balances below $3 million will continue to be taxed at the concessional rate of 15 per cent. Defined benefit interests will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests to ensure commensurate treatment.
Also in superannuation, employers will be required to pay superannuation contributions at the same time as wages from 1 July 2026, in a measure designed to increase compliance with superannuation legislation.
What it means for Small and Medium Business
A $20,000 instant asset write-off for small businesses with annual turnover below $10 million will be in place from 1 July 2023 to 2024.
A new Small Business Energy Incentive will also be introduced, providing businesses with turnover less than $50 million with a bonus 20% tax deduction for eligible depreciating assets up to $100,000 for energy saving upgrades.
The Budget will also provide $23.4 million to support small businesses to build resilience to cyber threats.