10th May, 2023
Small businesses make up more than 99% of all Australian businesses and play a crucial role at the heart of our communities, as well as contributing $700 billion to our GDP.
According to a new survey commissioned by MYOB, 84% of Australians agreed that supporting small business in the Federal Budget is key to helping drive economic recovery and stop a recession.
The survey of 600 Australians, released in early May, revealed 54% wanted to see more support for small businesses than big businesses.
However, only one-third of those polled were confident this Budget would deliver a positive outcome for small businesses.
So, what was in the Budget for SMEs? It was clear from Treasurer Jim Chalmers’ latest budget that support for SMEs was taken seriously, with aid for hip pocket and cashflow considerations as well as compliance burdens and staffing issues.
Here’s the rundown on the essential points you need to know. We’ll look at:
With business owners carrying the burden of compliance and other regulation, this can add a lot of stress to an already-full plate each year.
Happily, the 2023 Budget will provide ongoing funding to lower the tax-related administrative burden for small businesses and mid-market organisations.
Five new tax clinics will be established from 1 January 2025 to help improve SME access to tax advice and guidance, and from 1 July 2024, tax agents will be allowed to lodge multiple STP forms on behalf of their clients, cutting the time spent on paperwork.
Sign up for added insights and business-critical news from MYOB.
Small businesses will also be allowed to take up to four years to amend their income tax returns from 1 July 2025.
In addition, the Budget includes an expansion of the independent review process to small businesses (those with an aggregated annual turnover between $10 and $50 million) subject to an ATO audit. This is a temporary measure, though, with an 18-month trial to start.
Another big plus for SMEs is the new amnesty program around lodgement penalties, to encourage entrepreneurs to re-engage with the tax system.
The Government will provide funding over four years from 1 July 2023 to enable the ATO to better engage with businesses to address the growth of tax and superannuation liabilities due to late or incorrect payments.
The new amnesty program will remit failure-to-lodge penalties for outstanding tax statements lodged between 1 June 2023 and 31 December 2023 that were originally due in the period from 1 December 2019 to 29 February 2022.
As a result, SMEs (with an aggregated annual turnover of less than $10 million) that failed to lodge in the above period can now do so until the end of this year without penalty.
Small business owners are likely to be pleased that there was a temporary increase to the Instant Asset Write-Off included in the 2023 Budget, to $20,000.
Those with an aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets that cost less than $20,000. This will be for items purchased between 1 July 2023 and 30 June 2024.
Also, this Write-Off applies on a per-asset basis, meaning SMEs can instantly write off multiple assets with a value of under $20,000.
To help small businesses manage their tax instalments more effectively and thus improve cashflow, the Budget is halving the GDP adjustment factor for Pay-As-You-Go (PAYG) and GST instalments from 12 per cent to 6 per cent for the 2023-2024 income year.
This reduction will help provide cash flow support to PAYG instalment taxpayers and applies to small businesses and individuals with an aggregated annual turnover of up to $10 million for GST instalments and $50 million for PAYG instalments.
Many of the Government’s 2023 Budget initiatives will help SMEs who have been struggling with staff shortages in recent times.
There is an increase to the migration cap in the 2023 Budget, with pathways to permanency improving for skilled migrants, as well.
The Government will return the Migration Program planning level to the longer-term number of 190,000 places, allocating 137,100 of those to the Skill stream.
This increase will help to address the country’s longer-term skills need, as will the changes to the Temporary Skill Shortage visa holder program, with the Government making it easier for these migrants to become permanent citizens.
There will be a direct pathway for New Zealand citizens looking to gain Australian citizenship, too, with those living in the country from 1 July 2023 able to apply to become citizens without becoming permanent residents first.
Another step the Government is taking to help ease the skills shortage in Australia is to encourage pensioners and mothers back into the workforce.
There will be a six-month extension and $3.7 million spend in 2023-2024 on measures to provide aged and veteran pensioners with a once-off credit of $4,000 to their Work Bonus income bank.
There will also be a temporary increase of the maximum income bank until the end of this year.
All of this means that pensions can earn up to $11,800 before their pension is reduced.
In addition, the Budget included a commitment to design a voluntary system to support mothers preparing to re-enter the workforce.
Plus, the Treasurer committed additional funding of $54.3 million over three years from 2022-2023 to introduce a new non-financial support model for apprenticeships from 1 July 2024.
There will be grant funding of $5 million provided over three years from 2024-2025 to organisations with appropriate expertise in supporting women in the workplace, too.
This funding is intended to help further support women in historically male-dominated trade apprenticeships.
With the aged care and early childhood industries seeing huge employee shortages in the last couple of years, the Government is taking steps to help encourage higher numbers in these workforces.
The Budget features an $11.3 billion spend on funding a 15 per cent increase in award wages for 250,000 aged-care providers, along with a $72.4 million investment to retain and recruit more early childhood educators.
To help ensure Australian businesses have access to the right workers, and to help support vulnerable Australians and other workers to gain secure employment, the Government has pledged $12.9 million to redesign and extend the Commonwealth Foundation Skills Program.
It’s worth noting that in his mention of supporting SMEs to “adapt and adopt” technology, the Treasurer specifically mentioned investing in supporting Australians in the use of artificial intelligence (AI).
The 2023 Budget features numerous strategies for “investing in long-term national success” and “setting our country up for a better future,”. SMEs will be supported in numerous ways to help make this happen.
$392.4 million has been allocated to the establishment of the Industry Growth Program, supporting SMEs and startups to commercialise their ideas and grow their operations.
Plus, $39.6 million is being put aside for the continuation of the Single Business Service, which supports SMEs to engage with all levels of government.
The Regional Small Business Support Program Pilot will be extended until 30 June 2023, with $2.3 million in new funding being used to support regional small businesses in this way.
To help SMEs (those with an aggregated annual turnover of less than $50 million) to prepare for the future, the Small Business Energy Incentive will enable business owners to deduct an additional 20 per cent of the cost of eligible depreciating assets that support the more efficient use of energy.
This incentive will be available on a total expenditure of up to $100,000 (across various relevant asset types), giving a maximum bonus deduction of $20,000 to eligible SMEs.
Eligible assets must be installed and ready to use or first used between 1 July 2023 and 30 June 2024, and eligible upgrades must be made within the same period.
With hackers out in force more than ever these days and SMEs so vulnerable to attack, the Government is investing in helping Australians to keep data more secure.
The Budget includes funding of $23.4 million over three years from the 2023-2024 financial year for a small business cyber wardens program.
This program will be delivered by the Council of Small Business Organisations Australia and will help SMEs to build their in-house capacity to protect against cyber threats.
Furthermore, $19.5 million is being provided by the Government in 2023-2024 to continue working to improve the security of critical infrastructure assets.
This money will also go to assisting owners and operators in responding to significant cyberattacks when they occur.
With cost-of-living increases such an issue for individuals, families, entrepreneurs, and others right now, and top of mind in many ways, it’s not a surprise that the Budget also featured multiple strategies for combatting cost-of-living pressure for Australians. These included:
Many of the Budget announcements mentioned throughout this roundup will provide SMEs with short-term benefits and won’t perhaps provide as many ways to turbocharge economic growth as may have been expected.
However, all the measures are sure to come as a balm for business owners, many of whom are doing it tough in 2023.