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Federal Budget 2024-25
INFORMATION FOR SMEs
The 2024-25 Budget aims to address Australians' cost-of-living pressures while securing long-term economic prosperity. Its success in achieving these dual goals and its impact on inflation are yet to be determined, given the uncertain economic landscape.
Federal Budget 2024-25
Download your free copy of RSM's Federal Budget 2024-25 report here.
SMEs
Small business is again a winner with incentives and administrative concessions
Businesses with aggregated turnover of $0 to $10m.
Businesses with aggregated turnover over $10m.
CONTRIBUTOR
The Government has recognised small-to-medium enterprises (SMEs) as vital to Australia’s prosperity, contributing more than $500bn annually and employing more than 5.2 million people. However, tangible incentives for SMEs are limited in this year’s Budget, with the bulk of spending focused on bolstering Government support and administration systems.
Direct benefits for SMEs include a $325 electricity bill deduction, an extension to the Instant Asset Write-Off provisions, changes to import tariffs and support for cyber security preparedness.
Summary of key announcements for SMEs:
- Electricity bill refunds are a headline of this year’s Budget, with eligible SMEs receiving $325 in the 2024-25 financial year to be paid in quarterly instalments as a rebate against eligible electricity bills.
- The Instant Asset Write-Off has been extended once again, albeit with a reduced benefit compared to the proposal for the 30 June 2024 financial year. For the 2024-25 financial year (1 July 2024 to 30 June 2025), SMEs with a turnover of less than $10m are eligible to claim an immediate deduction for assets costing up to $20,000. This represents a decrease from the previous proposal for the 30 June 2024 year-end, which is currently stalled in the Senate. Under the pending proposal, SMEs with a turnover of up to $50m would be entitled to immediately write off assets costing up to $30,000. This stalled proposal represents ongoing uncertainty for small businesses.
- Import tariffs are subject to major reform with 457 tariffs being permanently set to zero from 1 July 2024. This reduces import tariffs on a wide variety of imported goods including toothbrushes, hand tools, appliances, clothing and sanitary products.
- $41.7m is being invested in several measures to help SMEs ensure they are cyber security ready. Measures include access to free training, support during a cyber incident and a tool for SMEs to access a cyber security risk assessment.
- $10.8m is being invested to allow SME owners to access mental health support under the New Access for Small Business Owners program and financial counselling services through an extension of the Small Business Debt Helpline.
Key announcements:
Approximately one million eligible SMEs will receive a $325 rebate against their electricity bills during the 2024-25 financial year, applied as a quarterly reduction during the financial year.
The Instant Asset-Write Off rules allow for the immediate deduction for the cost of depreciating assets for SMEs. Usually, the rules allow SMEs with turnover up to $10m to immediately write off assets costing up to $1,000.
In a measure currently stalled in Parliament, for the year ending 30 June 2024, it is proposed that SMEs with turnover up to $50m will be eligible to write off assets costing up to $30,000. The lack of enacted legislation supporting current year claims for small business is creating ongoing uncertainty.
This year’s Budget ignores the changes currently before the Senate and proposes that eligible SMEs with turnover up to $10m will be able to write off assets up to $20,000 for the 2024-25 financial year.
Key points are as follows:
- Temporary increase to the Instant Asset Write-Off threshold to $20,000.
- Applies to SMEs with aggregated annual turnover of less than $10m.
- Eligible assets must be first used, or installed ready for use, between 1 July 2024 and 30 June 2025.
- Applies on a per asset basis.
- Assets valued at $20,000 or more (which cannot be immediately deducted) may continue to be placed into the small business simplified depreciation pool and depreciated subject to the small business capital allowance rules.
- Provisions which prevent SMEs that have opted out of simplified depreciation measures from using the Instant Asset Write-Off continue to be suspended to 30 June 2025.
From 1 July 2024, 457 ‘nuisance tariffs’ are due to be permanently set to zero, cutting red tape and administration burdens for importing SMEs in the largest tariff reform announcement in two decades. This is expected to impact a wide range of imported goods including toothbrushes, hand tools, appliances, clothing and sanitary products.
A number of measures have been announced to provide targeted support to SMEs, including:
- $41.7m across several initiatives to support SMEs improve their cyber security preparedness, including access to free training, cyber incident support services and a cyber security self-assessment tool.
- $10.8m is being invested to allow SME owners to access mental health support under the New Access for Small Business Owners program and financial counselling services through an extension of the Small Business Debt Helpline.
- A focus on supporting First Nations SMEs through increased capital leveraging opportunities and First Nations business procurements.
- Significant investment in measures to reduce red tape and increase the opportunities for SMEs to tender for Government contracts.
Pay day superannuation remains on the horizon with a proposed 1 July 2026 start date. Under the proposed changes, employers will be required to attend to Superannuation Guarantee obligations on the same day as salary and wage payments are made.
