May 2023 Announcement-
Individuals
1.1 Medicare Levy threshold increased
The Government will increase the Medicare Levy Low income threshold for singles, families and pensioners from 01 July 2023 as follows:
• The threshold for singles will be increased from $23,365 to $24,276.
• The family threshold will be increased from $39,402 to $40,939.
• For single seniors and pensioners, the threshold will be increased from $36,925 to $38,365.
• The family threshold for seniors and pensioners will be increased from $51,401 to $53,406.
For each dependent child or student, the family income thresholds will increase by a further $3,760 instead of the previous amount of $3,619.
Small Business Measures
2.1 $20,000 instant asset write-off
The Government will temporarily increase the instant asset write-off threshold to $20,000 from 1 July 2023 to 30 June 2024.
Small businesses with an aggregated annual turnover of less than $10 million will be able to
immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
2.2 Small Business Energy Incentive
The Budget papers confirmed that the Small Business Energy Incentive will provide businesses with annual turnover of less than $50 million an additional 20% deduction on spending that supports electrification and more efficient use of energy.
Up to $100,000 of total expenditure will be eligible for the Small Business Energy Incentive, with the maximum bonus deduction being $20,000.
A range of depreciating assets, as well as upgrades to existing assets, will be eligible for the Small Business Energy Incentive. These will include assets that upgrade to more efficient electrical goods (such as energy-efficient fridges), assets that support electrification (such as heat pumps and electric heating or cooling systems), and demand management assets (such as batteries or thermal energy storage). Full details of eligibility criteria will be finalised in consultation with stakeholders. Eligible assets will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024. Eligible upgrades will also need to be made in this period. However, certain exclusions will apply, such as:
• electric vehicles
• renewable electricity generation assets
• capital works
• assets that are not connected to the electricity grid and use fossil fuels.
2.3 Small business lodgment penalty amnesty
The Government announced that a lodgment penalty amnesty program will be provided for small businesses with aggregate turnover of less than $10 million to encourage them to re-engage with the tax system. The amnesty will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due during the period from 1 December 2019 to 28 February 2022.
Superannuation Measures
3.1 Superannuation payments same day as Pay Day
From 1 July 2026, employers will be required to pay their employees’ superannuation at the same time as their salary and wages. Currently, employers are only required to pay their employees’ superannuation guarantee on a quarterly basis. By increasing the payment frequency of superannuation to align with the payment of salary and wages, this measure aims to ensure employees have greater visibility over whether their entitlements have been paid and better enable the ATO to recover unpaid superannuation. Our software providers will provide further guidance on this in the future.
3.2 Earnings for superannuation balances above $3 million taxed at 30%
From 1 July 2025, the Government will reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million. Earnings corresponding to the proportion of an individual’s total superannuation balance greater than $3 million will be taxed at 30%. (Up from 15%). This means that the proposed additional 15% earnings tax on an individual's balance above $3 million will operate on an accruals basis and include any notional (unrealised) gains and losses.
Tax Compliance Measures
4.1 Extension of Personal Income Taxation Compliance
The Government will provide $89.6 million to the ATO and $1.2 million to Treasury to extend the Personal Income Tax Compliance Program for two years from 1 July 2025 and expand its scope from 1 July 2023.
4.2 GST Compliance Program
The Government will provide $588.8 million to the ATO over four years from 1 July 2023 to continue a range of activities that promote GST compliance. These activities will ensure businesses meet their tax obligations, including accurately accounting for and remitting GST, and correctly claiming GST refunds.
Other Measures
5.1 FBT- Electric Car Discount
The eligibility of plug-in hybrid electric cars will sunset from 1 April 2025 from the FBT exemption for eligible electric cars. Arrangements involving plug-in hybrid electric cars entered into between 1 July 2022 and 31 March 2025 remain eligible for the Electric Car Discount. The law applies such that a plug-in hybrid electric car ceases to be a ‘zero or low emissions vehicle’ from 1 April 2025 and, thus, ceases to be eligible for the FBT exemption from 1 April 2025, subject to transitional measures.
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