Instant Asset Write Off Extension, Energy Bill Relief Headline Federal Budget

The 2024/2025 Federal Budget has arrived and small business owners will be welcoming news that the Instant Asset Write Off scheme has been extended, and around one million businesses will see some form of energy bill relief.  

While easing cost-of-living pressures is the major theme of the budget, there are some important takeaways for small business owners according to Retinue’s Head of Training and Development David Rosenthal CA.   

“The extension of the Instant Asset Write Off is great news for small businesses, it continues a popular program that allows the immediate deduction of assets up to $20,000 for eligible small businesses,” he said. “I’m sure business owners would have been hoping for more than $325 in energy bill rebates, but in this current economic environment every dollar counts.” 

“The announcement that may fly under the radar is the funding for tax compliance. The ATO has been very vocal about cracking down on aged debts, tax avoidance and unpaid superannuation, and the Federal Government is giving them increased funding and resources to follow through.” 

In this article we explore the key Budget announcements affecting small business. 

Instant Asset Write Off Extension 

In welcome news for small businesses, the Instant Asset Write-Off Scheme will be extended for the 24/25 financial year.  

How The Scheme Will Work 

The Instant Asset Write-Off is an incentive introduced by the Federal Government allowing businesses with less than $10m in aggregated turnover to immediately deduct the full cost of eligible assets up to $20,000. 

Threshold Limit 

The scheme permits immediate deductions for the full cost of each eligible asset up to a limit of $20,000. This threshold applies to each item, allowing eligible businesses to claim deductions on multiple eligible purchases. 

Eligibility Period 

Assets acquired must be first used or installed ready for use in the business between July 1, 2024, and June 30, 2025.  

Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year after that. 

Eligible Assets 

• Vehicles (subject to load and passenger limits) 
• Machinery and Equipment 
• Computers and Laptops 
• Office Furniture and Fittings 

• Tools and Machinery 
• Technology Hardware (printers, scanners monitors etc) 
• Solar Panels / Energy Efficient Equipment 
• Kitchen Equipment (restaurants and cafes) 
• Agricultural Machinery and Equipment 
• Manufacturing Equipment 

Superannuation Changes 

The scheduled increase to the superannuation guarantee (SG) entitlement will take effect from 1 July. The minimum SG rate will increase from 11 per cent to 11.5 per cent and all employers are required to ensure they are meeting their SG obligations to their employees. 

The budget also funds a previous government commitment to fund superannuation on the government-funded Paid Parental Leave (PPL), which will be administered by the ATO from 1 July 2025. 

Energy Bill Rebates 

The Government has announced that it will provide a $300 energy bill rebate to every household and additional energy bill relief to small businesses as part of the responsible cost of living help in the Budget. 

From 1 July 2024, all households will see a $300 credit automatically applied to their electricity bills and around one million small businesses will receive $325 off their bills over 2024–25. The credits will be applied in quarterly instalments. The Government is providing $3.5 billion for this relief, which extends and expands the energy bill relief rolled out to households and small businesses in 2023–24. 

Small businesses must meet their state and territory definition of electricity ‘small customer’, as determined by their annual electricity consumption threshold, to be eligible for a $325 annual rebate. 

Continuing the tax compliance crackdown 

Continuing the recent focus on tax compliance, the Budget contains additional funding for the Australian Taxation Office (ATO) to extend the following compliance programs:  

• Extending the Tax Avoidance Taskforce, Personal Income Tax Compliance Program and Shadow Economy Compliance Program. 
• Providing $187 million to the ATO from 1 July 2024 to strengthen its ability to detect, prevent and address fraud committed against the tax and superannuation systems. 
• Introducing a new penalty for multinationals that attempt to avoid Australian royalty withholding tax by understating royalty payments or seeking to disguise them as something else, to ensure they pay their fair share of tax. 

The ATO will also be given an extended time to notify a business owner if it intends to hold onto a BAS refund for further investigation. The notification period will increase from 14 days to 30 days. The ATO would be required to pay interest to the business owner on any legitimate refunds retained beyond 14 days. 

Additional Small Business-Related Funding Announcements 

• $2.6m for the Australian Small Business and Family Enterprise Ombudsman for initiatives supporting business-to-business dispute resolution.  
• $3m to implement reforms from the identified in the Review of the Franchising Code of Conduct. 
• $10.8m over two years from 2024-25 to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners program. 
• $25.3m in funding over four years from 2024-25 to upgrade ICT infrastructure for the Payment Times Reporting Regulator. 

Personal Tax Changes 

• HELP Debt Changes: A new cap to the HELP indexation rate to the lower of Consumer Price Index (CPI) or the Wage Price Index (WPI), backdated from 1 June 2023. This means that any HELP debts from 1 June 2023 will receive some relief as the interest charges will be reduced. 
• Stage 3 Tax Cuts: These will proceed as passed on 5 March 2024, the major changes effective from 1 July include: 

• $18,201 – $45,000: Tax Rate of 16% (down from 19%) 
• $45,001 – $135,000: Tax Rate of 30% (down from 32.5%, plus an additional tax threshold increase from $120,000) 
• $135,001 – $190,000 (Tax Rate of 37%, plus a threshold increase from $180,000)