As the Australian financial year unfolds, small businesses across the country are closely watching changes to taxation laws and regulations. From adjustments in instant asset write-offs to revised superannuation requirements, the 2024–2025 period is shaping up to be a pivotal one for many small firms.
Understanding these changes is essential not only for compliance but also for effective financial planning and business growth. For those unsure where to start, engaging experienced accountants brisbane qld can provide much-needed clarity and support tailored to your specific business needs.
In this comprehensive guide, we delve into the key tax changes affecting small businesses in Australia this year, breaking down what they mean, how they might impact your operations, and what actions you can take to stay ahead.
Key Points
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Instant asset write-off threshold has changed, impacting equipment purchases and deductions.
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Temporary full expensing has ended, requiring adjustments in investment strategies.
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Superannuation guarantee rate has increased, affecting payroll systems and employee costs.
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Small Business Energy Incentive offers deductions for energy efficiency upgrades.
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ATO’s digital transformation means updated lodgement processes and compliance expectations.
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Tax concessions thresholds have changed, impacting eligibility for various deductions and rates.
Instant Asset Write-Off Changes
What’s New?
The government has revised the threshold for the instant asset write-off scheme. For the 2023–2024 financial year, the threshold is set at $20,000 per asset. This scheme allows eligible businesses with an aggregated turnover of less than $10 million to immediately deduct the business portion of the cost of an asset, rather than depreciating it over several years.
What It Means for Your Business
This change can affect capital investment strategies. If you’re considering purchasing equipment or vehicles, timing your purchases within the financial year and under the $20,000 threshold can offer immediate tax benefits.
Action Point
Review your capital expenditure plans and consult a tax professional to determine whether your purchases qualify. It may be beneficial to split purchases into smaller orders or defer large acquisitions if they exceed the threshold.
End of Temporary Full Expensing
The Temporary Full Expensing measure introduced during the pandemic era concluded on 30 June 2023. This initiative allowed businesses to deduct the full cost of eligible assets regardless of their price.
Impact on Small Firms
With its demise, businesses must now revert to traditional depreciation schedules for assets that don’t fall under the instant asset write-off. This could impact cash flow and affect budgeting for large capital investments.
Practical Steps
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Assess whether you can still benefit from existing purchases under the old scheme.
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Adjust long-term forecasts to account for slower depreciation-based deductions.
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Consider leasing or financing options to manage capital outlay more effectively.
Changes to Superannuation Guarantee Rate
From 1 July 2023, the Superannuation Guarantee (SG) rate increased from 10.5% to 11%. This is part of a legislated plan to incrementally raise the SG rate to 12% by 1 July 2025.
Why It Matters
This increase directly affects payroll obligations. For small businesses with tight margins, even minor changes can have significant impacts on wage budgets.
What Employers Need to Do
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Update payroll software to reflect the new SG rates.
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Communicate changes clearly to staff, especially if their total remuneration includes super.
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Factor in the ongoing increases over the next two years when forecasting labour costs.
Small Business Energy Incentive
Announced in the 2023–2024 Federal Budget, the Small Business Energy Incentive encourages firms to invest in energy-efficient equipment by offering enhanced deductions of up to 20% on eligible expenses.
Eligibility Criteria
Businesses must have an annual turnover under $50 million and make eligible purchases (such as electric heat pumps, batteries, or other energy-efficient machinery) between 1 July 2023 and 30 June 2024.
Making the Most of It
This is an excellent opportunity for businesses to reduce long-term energy costs while receiving a tax benefit. It’s also a step towards meeting ESG (environmental, social, and governance) goals.
ATO Compliance and Digital Lodgements
The ATO continues its push toward digital transformation. e-Invoicing, Single Touch Payroll Phase 2, and real-time reporting are part of the broader plan to streamline compliance and reduce errors.
STP Phase 2
Employers must report more detailed payroll information to the ATO, including gross income, paid leave, and allowances.
e-Invoicing
While not yet compulsory for all small businesses, e-Invoicing is encouraged and may become mandatory in future years. It boosts efficiency and reduces invoice fraud risks.
What You Should Do
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Ensure your accounting platform supports STP Phase 2 and e-Invoicing capabilities.
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Seek support from advisors or accountants brisbane qld to ensure compliance without business disruption.
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Train relevant staff members on new reporting requirements.
Tax Concessions and Eligibility Adjustments
Several tax concessions for small businesses have been updated, including thresholds for simplified depreciation, GST reporting, small business income tax offset, and fringe benefits tax (FBT) exemptions.
Key Adjustments
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Small Business Income Tax Offset: Up to 16% for businesses with turnover below $5 million, capped at $1,000.
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FBT Exemptions for Portable Devices: Now includes more types of electronics such as tablets and smartphones.
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GST Installment Threshold: Increased, allowing more businesses to opt into simpler GST reporting methods.
Planning Tips
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Review your turnover and eligibility status annually to maximise available concessions.
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Plan ahead before EOFY to leverage all possible concessions.
Increased Small Business Support and Audits
The ATO has received increased funding to focus on tax compliance and closing loopholes, resulting in more audits and data-matching initiatives.
Areas Under Greater Scrutiny
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Work-related deductions
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Cash-only businesses
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Incorrect GST claims
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Superannuation guarantee compliance
How to Stay Compliant
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Keep accurate records of all transactions.
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Reconcile accounts monthly to detect errors early.
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Consult professionals regularly to ensure ongoing compliance.
Preparing for the Year Ahead
The 2024 financial year presents both opportunities and risks. Whether it’s updating software, planning investments, or seeking expert advice, proactive management is essential.
Remember, tax compliance isn’t just about avoiding penalties—it’s also about optimising operations for long-term growth. Take time to understand the rules, leverage new incentives, and seek guidance tailored to your business model.
Frequently Asked Questions (FAQ)
1. What is the instant asset write-off threshold for 2024?
The threshold is $20,000 per asset for eligible small businesses. Assets must be first used or installed ready for use in the 2023–2024 financial year.
2. Can I still claim temporary full expensing?
No, this measure ended on 30 June 2023. Only assets purchased and used before that date are eligible.
3. How does the superannuation rate increase affect my business?
Employers must now contribute 11% of an employee’s ordinary time earnings to their super fund, impacting payroll costs.
4. What is the Small Business Energy Incentive?
It offers a 20% bonus tax deduction on eligible energy-efficient equipment purchases made between 1 July 2023 and 30 June 2024.
5. Do I need to adopt e-Invoicing now?
Not mandatory yet, but strongly encouraged. Early adoption can streamline invoicing and improve cash flow.
6. How do I ensure I’m eligible for small business concessions?
Track your turnover and consult a tax professional annually to confirm eligibility.
7. What if I make a mistake in STP Phase 2 reporting?
The ATO allows a correction window, but repeat mistakes may trigger audits. Keep software updated and train staff.
8. Where can I get help with these changes?
Reach out to professional advisors such as accountants brisbane qld who specialise in small business tax law and financial planning.