It’s Budget time again and below is our Federal Budget 2023-24 relevant highlights for VJC clients and snapshot

  • Surplus of $4.2 billion for current financial year
  • Cost of living relief has been delivered mainly through the transfer system rather than the tax system
  • Small business and the ATO are winners in this Budget. Multinationals, resource companies and smokers face higher taxes
  • This Budget relies on ATO compliance activities
  • There is a Deficit of $13.9 billion expected in 2023-24


From super being paid with wages to instant asset write off, here are the six budget measures you need to know


1. Energy boost to small business

The Government has announced a bonus 20% deduction for small businesses (turnover less than $50 million) for expenditure that supports electrification and more efficient use of energy.

The bonus is capped at $20,000 per annum and to assets first used or installed ready for use between 1 July 2023 and 30 June 2024.


2. Superannuation to be paid with wages

From 1 July 2026, employers will be required to pay superannuation on payday, rather than at least quarterly. This gives businesses and superannuation funds three years to prepare.

Some businesses need to start this work sooner rather than later. Significant administration changes will be required for this transition to be successful.


3. Small businesses are winners

Small business will be able to:

  • Access the instant asset write off for assets costing less than $20,000 if they are used or installed ready for use between 1 July 2023 and 30 June 2024.
  • Claim an additional 20% deduction (up to a $20,000 cap) for depreciable assets that support the electrification and more efficient use of energy (see 1. above).
  • Participate in a lodgement penalty amnesty program which will remit failure to lodge penalties for outstanding tax statements in the period from 1 June 2023 to 31 December 2023 that were originally due between 1 December 2019 and 29 February 2022.

However small businesses should note that temporary full expensing and the loss carry back provisions have not been extended.


4. GDP adjustment factor

The pay as you go instalment and GST instalment GDP adjustment factor will be set at 6% rather than 12% for the 2023-24 year.


5. Super fund non-arm’s length expenditure

Non-arm’s length expense tax penalties (this relates to any mischief, that is expenses not charged at an arm’s length rate) will continue to apply to self-managed superannuation funds and small APRA funds but at a reduced rate of two times.

APRA funds have been fully excluded.

Start date moved to 1 July 2019

  • In January 2023 the Government suggested expenses not charged at an arm’s length rate, will be multiplied by five times and taxed at 45%.
  • The Government has now elected to reduce this from five times to two times.
  • In addition, taxable contributions will be exempt from facing penalty taxes. The two times penalty will then be taxed at 45%, but if the doubling of the mischief amount includes taxable contributions, the penalty will not apply.


6. ATO compliance program

More money has been allocated to the ATO for compliance activity, for areas such as personal tax, GST and tax debt collection.

$9.1 billion is expected to be raised over 5 years from this expenditure.

  • The largest revenue raising items result from increased ATO compliance funding and tobacco tax increases.
  • The money is expected to be raised through extending the personal income tax compliance program, the GST compliance program and the merged Serious Financial Crime Taskforce with the Serious Organised Crime program.
  • The ATO has also received funding to deal with taxpayers with a tax debt of $100,000 or more and with large corporates and high wealth individuals whose debt is more than two years old.
  • The Government has announced an expansion of the general anti-avoidance rule (Part IVA) so that it can apply to:
  1. Schemes that reduce tax in Australia can access a lower withholding tax rate on income paid to foreign residents, and
  2. Schemes that achieve an Australian income tax benefit even where the dominant purpose was to reduce foreign income tax.

The increased scope will apply from 1 July 2024 regardless of when the scheme was entered into.


Other major changes to watch:

Build to rent, to help with the housing crisis, property developers will be given extra incentives to create build to rent properties.

  • For build to rent properties which begin construction after 9 May 2023, a capital works deduction at 4% instead of 2.5% will be available.

Foreign investors from 1 July 2024, foreign investors in Singapore, Canada, Japan, Germany, UK and USA will be eligible for 15% rates on managed investment trust distributions of taxable income subject to certain adjustments.

Electric car FBT exemption: plug-in hybrid cars acquired after 1 April 2025 won’t be able to benefit from the FBT exemption.


In the pipeline, the proposed $3 million superannuation tax threshold that was included in tonight’s Federal Budget.

  • The new tax, which aims to ensure generous superannuation concessions are better targeted and sustainable, will bring the headline tax rate to 30 per cent, up from 15 per cent, for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million.
  • A major concern is the issue of taxing unrealised capital gains.  This comes about because of the proposed calculations used to determine how much tax is paid.  Two other problems starting to get coverage is the treatment of unrealised capital losses and how defined benefit pensions will be treated.
  • Before implementing any changes, super fund members will have to decide what adjustments they will make to where and why they hold their savings.  There are pros and cons with any investment choice and the various options will have to be considered.  For example, should I take money out of super and use it to upgrade to a better family home?  Or should I distribute some of my wealth early to my independent adult children?

You are welcome to discuss your specific situation and any concerns with our principal @ VJC , Adrian Chaudhary

General Advice warning: the information in this article is general in nature, it is not advice specific to your needs. If you want to act upon the information in this article then you should seek advice from a qualified professional. VJC accepts no liability to any party for acting from this information unless they have sought advice in a formal engagement with VJC for this purpose.