Budget 2023: 13 key measures for small business in the 2023 federal budget

Energy price relief, an unexpected revitalisation of the instant asset write-off scheme, and a $392 million program to commercialise small business innovations are just a few of the policies included in the 2023-2024 federal budget. The full scope of the expectation-defying document will come into focus in the days to come, but here are the key policies and updates for SMEs delivered by the Albanese government’s first ‘full’ budget.

Energy price relief

As forecast before the budget, direct energy bill relief is on the way for as many as one million small businesses. $1.5 billion over the next two years will go towards “targeted energy bill relief to eligible households and small business customers. Treasurer Jim Chalmers says Commonwealth rebates of $325 are on the way; in jurisdictions which have matched the funding from Canberra, small businesses will receive a total of $650 in bill support. 

The Small Business Energy Incentive

Small and medium businesses which invest in energy-efficient systems — think next-generation refrigeration, batteries, or thermal energy storage — will be eligible for bonus tax deductions. With eligible expenditure capped at $100,000, the 20% bonus will provide up to $20,000 in deductions. It is another measure flagged before the budget, but remains notable as a pillar of the Albanese government’s approach to SME support.

$20,000 instant asset write-off

Small businesses and industry groups have long feared the end of Temporary Full Expensing and generous instant asset write-off schemes this year will hamper investment plans. In something of a surprise, the federal government will launch a refreshed instant asset write-off scheme for purchases up to $20,000. Don’t expect it to stick around: it will apply for upgrades installed or first used in the 2023–2024 financial year.

Cash flow boost

In an attempt to protect small businesses operating on thin margins, the federal budget introduces a new way of calculating the increase of Pay As You Go and GST payments. The current 12% GDP adjustment factor will be halved with a new 6% rate, a move slated to improve cash flow for 2.1 million small businesses.

Reducing regulatory burdens

Time is money, so they say. Now, the federal budget has pledged to give small business owners more time to run their enterprises instead of fiddling with tax measures. Accountants and tax agents will be empowered to file multiple Single Touch Payroll forms on their clients’ behalf from mid-2024, rather than employers having to complete the process each month.

From July 1, 2025, small businesses will also be granted up to four years to amend their income tax returns, “reducing the burden of making revisions.” The ATO has also vowed to minimise the use of cheques, resulting in faster, easier tax refunds.

Increasing small business tax compliance…

That’s all well and good, but the ATO is also staring down many billions of collectable debts held by Australian small businesses. To whittle away at the tax gap and hear from debtors, it will:

• Offer an amnesty on failure-to-lodge penalties for certain late payments going back to late 2019
• Spend $9 million over four years on tax ‘clinics’ to expand access to solid SME taxation advice
• Provide $12.8 million to trial-run an expanded independent review system, allowing medium-sized enterprises to plead their case 

… While cracking down on tax rulebreakers

Broadly speaking, the supportive measures above refer to SMEs which own up to debts, or actively seek ways to improve their tax compliance. Businesses deliberately flouting the rules should not expect such leniency. The ATO will receive $588.8 million over four years to improve GST compliance among businesses; on top of old-school sleuthing, it will help the tax office “develop more sophisticated analytical tools to combat emerging risks to the GST system.” That largely reflects the massive tide of would-be GST scammers filing tax returns for ‘sales’ which never happened, but small businesses reliant on shady cash jobs should beware.

$392 million for small business innovation

One of the most eye-grabbing figures contained in the 2023-2024 federal budget is the $392 million assigned to launch the Industry Growth Program. The initiative will help small businesses and startups commercialise their concepts and expand their operations. Eligible businesses will need to focus on priority areas listed in the National Reconstruction Fund.

Expanding apprenticeship support models 

$54.3 million over five years will introduce “a new non-financial support model” for Australian apprentices, moving past prior attempts to entice apprentices and encourage their employers with direct financial backing. The shake-up will “redesign and refocus key support services”, budget papers say, “to increase apprenticeship completion rates and the diversity of the apprentice workforce.” Notable, given Australia’s lingering skills shortages in key areas. Expect further details in the months ahead.

Promoting gender diversity in apprenticeships 

Reflecting on the gender disparity at play in many foundational industries, $5 million in grant funding will flow to organisations devoted to making the worksite more inclusive. “This will include providing education, advice or support to increase culturally safe and inclusive workplaces, reduce the cultural barriers to women’s participation, address workplace challenges and support businesses to attract and retain women,” the budget papers say.

Cyber Wardens to boost SME digital resilience

$23.4 million will go towards the Cyber Wardens program, a digital resiliency and cybersecurity program launched by the Council of Small Business Organisations Australia (COSBOA). It aims to provide Australia’s first micro-credential for cybersecurity in the SME sector, providing a pathway for small enterprises to shield themselves from growing digital threats. It’s also not a bad outcome for COSBOA, which has long pushed for federal government support on this initiative.

Expanding small business access and awareness of government contracts

Australia’s small businesses are often locked out of lucrative government contracts, with critics declaring application processes are too opaque and geared towards bigger competitors. The federal government says its cheerily-titled ‘Buy Australia Plan’ will improve SME access to the big jobs. $18.1 million over four years from 2023–24 will help businesses compete for tenders, update the AusTender system, and bolster SME awareness of federal government contracts.

Working hours for student visa holders

The cap on working hours for international student visa holders, which was abandoned as COVID-19 restrictions dried up the labour pool, will return on July 1, 2023. However, the cap will permanently lift by eight hours per week, to 48 hours, potentially granting students the ability to clock an extra day of work compared to pre-pandemic levels. 

To see SmartCompany‘s full budget coverage, click here.