Small business incentives are a key initiative from the government to support small businesses in Australia given the challenges of the current economic climate.  Below we provide a brief snapshot of these government initiatives that small businesses may benefit from in the coming financial year.

Instant Asset Write-Off – Threshold for 2023-24: $20k

The Instant Asset Write-Off (IAWO) scheme allows small businesses to deduct the cost of eligible assets costing up to $20,000. The Instant Asset Write-Off scheme replaces the more generous Temporary Full Expensing scheme which came to an end on 30 June 2023.

Eligible Businesses

In order to qualify for the IAWO scheme you must carry on a business and have an aggregated turnover of less than $10m. Aggregated turnover includes your annual turnover and the annual turnover of any business entities that are affiliated or connected with you.

Eligible Assets

For an asset to qualify for the IAWO:

  • The asset must cost less than the relevant threshold amount, which for 2023-24 is $20,000.
  • The asset must be first used or installed ready for use before 30 June 2024.

This Small Business Incentive measure was announced during the 2023-24 Federal Budget and is yet to be legislated. We expect that when legislated some exclusions may apply such as requiring the asset to be used predominantly for business purposes and not used to derive passive income such as rental income. As with previous iterations of the IAWO we expect eligible assets to be limited to depreciating assets such as plant and equipment and not capital works such as improvements to buildings.

Small Business Energy Incentive – Investing in Energy-Efficient Assets

On 30 April 2023 the Government announced its Small Business Energy Incentive. The incentive will provide businesses with a bonus deduction of 20 percent for eligible assets installed and ready for use between 1 July 2023 and 30 June 2024. The maximum bonus deduction available under this scheme is $20,000.

The scheme is intended to assist eligible businesses to invest in items such as electric heating systems, upgrading to more efficient refrigerators and installing batteries and heat pumps. The installation of electricity generating assets such as solar panels are not eligible for the incentive.

Eligible Businesses

In order to qualify for this incentive, businesses must have an aggregated turnover of less than $50m. Please see the above in relation to aggregated turnover.

Eligible Assets

The Government has released an Exposure Draft which sets out proposed eligibility criteria for assets under the scheme. One of the eligibility criteria is the asset replaces another depreciating asset and is more energy efficient than the asset that it is replacing. An example given in the Exposure Draft Explanatory Materials is where a small business installs a new air-conditioning unit that is more efficient than the unit it replaces.

This measure is not yet legislated. Businesses will need to wait for this measure to be legislated in order to determine eligibility for incentives under this scheme.

Skills Training Boost

The Skills Training Boost was announced in the 2022-23 Federal Budget and provides businesses with a bonus deduction of up to 20% for eligible expenditures incurred between 29 March 2022 and 30 June 2024. Unlike similar incentives, there is no cap on the amount of expenditure that qualifies for the bonus deduction under this scheme.

Eligible Businesses

In order to be eligible for this incentive, you must carry on a business and have aggregated turnover of less than $50m.

Eligible Expenditure

In order for expenditure to be eligible for the bonus deduction, it must be:

  • For the provision of training to employees of your business, either in-person in Australia, or online;
  • Charged, directly or indirectly, by a registered external training provider that is not you or an associate of yours;
  • Deductible for your business under taxation law;
  • Incurred between 29 March 2022 and 30 June 2024

Small Business Lodgement Penalty Amnesty

As part of the 2023-24 Federal Budget the Government announced that it will provide an amnesty for late lodgement penalties to assist small businesses to bring outstanding lodgements up to date.

Eligible Businesses

You must carry on a business and have an aggregated turnover of less than $10m to be eligible for the amnesty.

Eligible Lodgements

The amnesty applies to income tax returns, fringe benefits tax returns and business activity statements with an original due date between 1 December 2019 to 28 February 2022 which are lodged between 1 June 2023 and 31 December 2023.

While the amnesty provides welcome relief for small businesses who may have fallen behind with their tax lodgements, past experience with ATO amnesties tells us to expect the ATO to be more stringent in relation to late lodgement penalties once the amnesty period has ended.

More Information

Please contact the team at BYRONS should you want to know more about any of the Small Business Incentives above and how they may apply to your business.

BYRONS are leading tax specialists and as your trusted advisors assist you to provide relevant taxation suggestions with the aim of achieving a tailored and complete tax solution.

Author: Simon Alford, Partner of Tax at BYRONS.

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