How Accountants for Small Business Can Optimise Asset Write-offs & Energy Incentives, 2023/24 Guide
As a business owner, you're likely always looking for ways to lower your taxes and make your operations more efficient. In the 2023/24 fiscal year, the government has announced new incentives and provisions to help businesses, especially small enterprises. If you're wondering how you can make the most of these new measures, this is where accountants for small business, like Cordner Advisory, become essential.
Cordner Advisory offers specialised accounting services tailored to small businesses. Our team stays up-to-date on the latest tax law changes and energy efficiency incentives, so you don't have to.
By leveraging tax-efficient strategies, tax accounting and incentive programs, we aim to help you plan for and maximise asset write-offs and optimise operating costs. Cordner Advisory can assist you in comprehending and handling the challenges of the 2023/24 fiscal year.
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New Small Business Tax Incentives and Measures
Discover the newest 2023/24 asset write-off and energy incentives. Contact Cordner Advisory, your reliable small business accountants, to see if your business qualifies for these benefits.
The $20,000 Small Business Instant Asset Write-off
According to the 2023/24 Budget, the Australian Government has increased the instant asset write-off limit to $20,000. This change will be effective from July 2023 and will last until June 2024.
The Details:
Small businesses can claim an immediate tax deduction for purchasing a qualifying depreciating asset costing less than $20,000. This deduction applies if the asset is used during the 2023/24 fiscal year.
The asset must be first used or installed, ready for use within the 2023/24 fiscal year.
In short, the cost of the asset can be deducted from the business's taxable income in the very year it's purchased and used.
For businesses registered for GST, the cost of the asset should be less than $20,000 after subtracting any GST credits. For those not registered for GST, the total cost, inclusive of GST, should not exceed $20,000.
This write-off isn't just a one-off! It applies per asset, allowing businesses to claim deductions for multiple asset purchases. However, it's essential to note that this rule mainly caters to assets under the depreciation provisions. Capital improvements on buildings, for instance, are unlikely to qualify.
If you have assets valued at $20,000 or more, they won't be immediately deductible. However, for eligible small businesses, they can still be placed into the Small Business Simplified Depreciation Pool. The assets are then depreciated at 15% in the first year and 30% in subsequent years.
Note also that small businesses that previously opted out of the Simplified Depreciation system can re-enter without the 5-year limitation until 30 June 2024.
With these changes, the rules for immediate full temporary asset expensing acquired after 6 October 2020 have now ended on 30 June 2023. If you're contemplating acquiring assets costing $20,000 or more, be wary of this cut-off.
Cordner Advisory are your small business accounting partners. If you’re looking for support to navigate the implications of these changes on your business, reach out today.
Need business advisory regarding tax and accounting for your small business? Speak to a Cordner Advisory expert today. Contact us here.
$20,000 Small Business Incentives for Energy Efficiency
Apart from the immediate asset write-off, there's another notable incentive for small businesses, kicking off from 1st July 2023 and will currently run through to 30th June 2024. This is the Small Business Energy Incentive.
The Details:
Small businesses receive an added 20% deduction on the cost of specific assets. These assets promote electric use and energy efficiency. This incentive is designed to help small businesses.
Eligible businesses can claim for up to $100,000 of total expenditure, this could translate to a whopping bonus deduction of $20,000.
To avail of this bonus deduction, the assets or upgrades should be utilised or installed and ready for use within the stipulated fiscal year.
Though the exhaustive list of assets that qualify for this incentive is still in the wings, it's expected to cover a plethora of depreciating assets. From modernising heating and cooling systems to installing batteries and heat pumps, many avenues can be explored. However, certain assets like electric vehicles, renewable energy generators, and those disconnected from the electricity grid and using fossil fuels are likely to be excluded.
If you're a small to medium enterprise with an annual turnover of less than $50 million, this is a golden opportunity to explore.
“Eligible businesses can claim for up to $100,000 of total expenditure, this could translate to a whopping bonus deduction of $20,000.”
Lowering Tax Instalments for Small Business
A sigh of relief for many, the Government has adjusted the GDP uplift factor for GST and PAYG instalments, setting it to 6% for the 2023/24 income year, a considerable reduction from the projected 12%.
The Details:
The 6% GDP adjustment rate will apply to small businesses and individuals who are eligible to use the relevant instalment methods. (Up to $10 million aggregated annual turnover for GST instalments and $50 million annual aggregate turnover for PAYG instalments).
It will also apply for instalments for the 2023–24 income year that are due after the enabling legislation receives royal assent.
This change promises to lighten the tax load for numerous small to medium-sized businesses, offering cash flow assistance to smaller enterprises and PAYG instalment taxpayers. Eager to understand its implications for your business? Reach out to Cordner Advisory, the specialists accountants for small businesses, today.
Franked Distributions Funded by Capital Raising
In light of certain distributions of franking credits funded by capital raising, the Government has announced an important change to be wary of.
The Details:
The Government has introduced a specific measure to prevent a company from attaching franking credits to distributions to shareholders made outside or additional to the company’s normal dividend cycle. This applies to the extent the distributions are funded directly or indirectly by capital raising activities that result in the issue of new equity interests.
The Government has stipulated a revised start date, applying this measure to distributions made on or after 15 September 2022.
Note the measure is not yet law.
Such a move seeks to balance the scales and prevent undue advantage-taking by shareholders.
If you are contemplating entering into these types of arrangements, reach out to Cordner Advisory, your specialist small business accountants to learn more.
Tax Breaks for Build-to-Rent Developments
The real estate sector, particularly the build-to-rent niche, has received a boost with attractive tax breaks.
The Details:
Eligible new build-to-rent projects that commence construction post-9 May 2023 will enjoy an increased capital works tax deduction rate of 4% per annum. This increase from 2.5% will shorten the period that construction costs of eligible buildings are depreciated from 40 to 25 years.
Moreover, a reduction in the final withholding tax rate on eligible fund payments from managed investment trust investments from 30% to 15% is in the offering and is set to apply from 1 July 2024.
These actions will try to boost the housing market, encourage investment, and make renting more stable and affordable. Keep up to date with the progression of these new measures (not yet law) with Cordner Advisory.
How are you calculating your small business asset write-offs & energy incentives. Contact Cordner Advisory today to learn more.
Looking to the future
Changes to Super Payments
To simplify the payment process, the frequency of employer payments for super guarantee entitlements may be changed.
The Details:
Starting 1 July 2026, employers will be mandated to pay their employees' super guarantee entitlements concurrently with their wages, a shift from the prevailing quarterly payments.
The Australian Tax Office will work with industry and stakeholders on implementing these changes, which are not yet law.
This will affect cashflow planning for many small businesses. If you are looking for support to prepare, reach out to Cordner Advisory, your small business accounting specialist.
Changes to Fringe Benefits Tax for Plug-in electric vehicles
To make the difference clear between electric and hybrid cars, there will be a change in the Fringe Benefits Tax law.
The Details:
From 1 April 2025, plug-in hybrid electric cars will be excluded from the fringe benefits tax exemption for eligible electric cars. This means that they will not be considered a zero or low emissions vehicle under FBT law.
However, the exemption can continue to apply if both of the following requirements are met:
Use of the plug-in hybrid electric vehicle was exempt before 1 April 2025; and
You have a financially binding commitment to continue providing private use of the vehicle on and after 1 April 2025. For this purpose, any optional extension of the agreement is not considered binding.
If you are considering purchasing or have purchased a hybrid vehicle, get in touch with Cordner Advisory today to explore how these changes may impact your business.
Clean Building Managed Investment Trust Concession
The clean building managed investment trust (MIT) withholding tax concession is being extended and updated, targeting energy-efficient buildings.
The Details:
During the 2023/24 Budget, the Australian Government announced it will extend the clean building managed investment trust (MIT) withholding tax concession to eligible data centres and warehouses.
Note these measures are not yet law.
The measures aim for the concession to be extended to data centres and warehouses that meet the relevant energy efficiency standard, where construction starts after 7:30 pm AEST on 9 May 2023. This measure will apply from 1 July 2025.
This initiative will elevate the minimum energy efficiency standards for both existing and new clean buildings.
These changes aim to bolster investment in energy-efficient commercial structures, subsequently lowering energy consumption and bills for commercial tenants. If you're seeking guidance on this transition, Cordner Advisory stands ready to offer support and insights for small businesses.
Need Advisory On Small Business Asset Write-Offs & Energy Incentives?
Why Cordner Advisory is Your Go-To for Small Business Accounting
At Cordner Advisory, we've been serving a diverse range of businesses across multiple industries since 1981. We don't just offer you textbook advice. Instead, we amalgamate our extensive experience with local care and attention.
Not based on the Broadbeach, Gold Coast? No worries. Our expertise transcends geographical boundaries.
Remember, expertise in financial matters, tax planning, business decision support, and many more are just the tip of the iceberg when it comes to navigating challenges you might face. Cordner has a team of accountants for small businesses. This allows you to focus on your business. We will manage the complexities. After all, we don't just aim to be accountants for small businesses. We aspire to be your business's financial guardians.
Are you ready to navigate the 2023-2024 fiscal incentives with precision and expertise? Click here to connect with Cordner Advisory today!
FAQ | Small Business Asset Write-Offs & Energy Incentives:
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The 2023/24 fiscal year brings significant changes for small businesses in Australia. Some key highlights from the announcement of the Australian budget include the $20,000 Small Business Instant Asset Write-off which is an increase to the instant asset write-off limit to $20,000, a Small Business Energy Incentive offering a 20% deduction on energy-efficient assets, lower GST and PAYG tax instalment rates, and tax breaks for build-to-rent developments. Stay informed about these changes with Cordner Advisory, your accountants for small businesses.
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The $20,000 Small Business Instant Asset Write-off allows eligible small businesses to claim an immediate tax deduction for the purchase of qualifying depreciating assets costing less than $20,000. The asset must be used or installed and ready for use within the 2023/24 fiscal year. This deduction reduces the business's taxable income for the year the asset is purchased and used, offering potential tax savings. Cordner Advisory can help you navigate this incentive and maximise its benefits for your business. Get in touch today.
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The Small Business Energy Incentive provides a 20% deduction on the cost of specific energy-efficient assets, aimed at promoting energy efficiency for small businesses. Kicking off from 1st July 2023, this incentive will currently run through to 30th June 2024. Eligible businesses can claim up to $100,000 in total expenditure, potentially translating to a significant bonus deduction of $20,000. Among the eligibility requirements is that assets must be utilised or installed and ready for use within the 2024 fiscal year. This incentive can help lower energy costs and improve sustainability. For more information, reach out to Cordner Advisory.
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The Government has adjusted the GDP uplift factor for GST and PAYG instalments to 6% for the 2023/24 income year. This is down from the projected 12%. This change applies to small businesses with specific annual turnover thresholds. It can offer cash flow assistance by reducing tax instalments for smaller enterprises. Cordner Advisory can help you understand the implications of this change for your business, reach out today to learn more.
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From 1 April 2025, plug-in hybrid electric cars will no longer be exempt from the Fringe Benefits Tax for eligible electric cars, differentiating them from zero or low emissions vehicles. However, certain conditions can still allow the exemption to apply. If you own or are considering purchasing hybrid vehicles, it's essential to understand how these changes may impact your business. Cordner Advisory can provide guidance on navigating this transition.
Cordner Advisory is your trusted partner in understanding and optimising these incentives and measures for small businesses in the 2023/24 fiscal year. Contact us for expert support tailored to your business's needs.
