What SMEs need to know before July 1, 2023

By Zilla Efrat 

Are you ready for the start of the next financial year? Several changes start from July 1, 2023, which could affect your business. Here’s a look at some of them. 

Tax changes

In its May 2023 budget, the Federal Government announced that the instant asset write-off had been temporarily increased and extended. Eligible SMEs with an aggregated turnover of less than $10 million will be able to deduct the full cost of eligible assets valued at less than $20,000 in the 2023–24 tax year. 

The $20,000 threshold will apply on a per-asset basis, so small businesses can instantly write off multiple assets. But for them to benefit, their purchases must be installed and ready for use between July 1, 2023, and June 30, 2024. 

Sadly, the loss carry-back provisions, which enabled eligible entities to carry back losses to earlier years in which there were income tax liabilities, will no longer be available from July 1. 

Energy cost relief

Another May 2023 budget announcement, the Small Business Energy Incentive, also kicks off on July 1. It provides those SMEs with an annual turnover of less than $50 million with an added 20% deduction on spending that supports electrification and more efficient use of energy. 

Up to $100,000 of total spending will be eligible for this incentive, with the maximum bonus tax deduction being $20,000 per business. To benefit, eligible assets or upgrades must be first used, installed or ready for use between July 1, 2023, and June 30, 2024. 

Also starting from July 1 is the Energy Price Relief Rebate. It will provide eligible SMEs with up to $650 to ease the pain of rising power costs. This money, to be paid by the federal government and your state or territory government, will be deducted from your power bill. 

PAYG and GST

The PAYG and GST GDP adjustment factor will be set at 6% for the 2023–24 financial year, down from the 12% that would have been applied under the statutory formula, to help SMEs with cash flow. 

Eligible businesses must already fall under current PAYG and GST instalment eligibility thresholds: $10 million in aggregated turnover for GST instalments and $50 million in aggregated turnover for PAYG instalments. 

Affecting your employees

Also changing is the Superannuation Guarantee rate. It rises from 10.5% to 11%, so don’t forget to update your payroll systems. 

In addition, the cap for small claims proceedings under the Fair Work Act will jump from $20,000 to $100,000, thus enabling more workers to access dispute resolution through small claims court proceedings. Other changes mean the costs and complexity will fall for SMEs responding to these claims. 

In yet another change, the current entitlement to 18 weeks of paid parental leave will be combined with the current dad and partner pay entitlement to two weeks’ pay. This means couples will be able to claim up to 20 weeks of paid parental leave between them. Single parents can access the full 20 weeks of leave. A $350,000 family income limit will apply to those claiming paid parental leave pay. 

If you need funding to take advantage of some of the changes coming your way on July 1, 2023, give us a call to find out how we can help you.