Growthwise

Federal Budget recap video is now live.

Whilst the budget papers were over 1,000 pages long, they offered very little for businesses. We've summarised what this means to you in our recap video

Budget 2024 Recap If you need a quick summary of what was announced in last night this is for youPrefer to read the updates? Head over to our website www.growthwis...

SMSF's

No news.......is generally good news for SMSF's!

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SMALL BUSINESS

We've been diving into the budget papers looking for anything exciting for small businesses, and this is what we have come up with...........
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Whilst the budget papers note that 'Australia's 2.5 million small businesses are vital to the country's prosperity', noting they contribute $500 billion to the economy and employe 5.2 million people, there is little to nothing for small businesses.

The only things to note :
- Instant Asset write-off is extended to 30 June 2025 ($20k)
- Some small businesses will get $325 to help pay energy bills
- Continued assistance for employing apprentices, note this isn't the 50% of wages in previous years, it's the 1 off payments of $5k

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HECS

An estimated $3bill worth of HECS debts will be wiped. Last year HECS was indexed by 7.1% (ie it increased), this has been lowered which will result in an average student getting a credit of $1,200.

For future years HECS will be matched to the lower of CPI or WPI (wage price index)

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SUPERANNUATION

The ATO will be given $27m to improve the data matching capabilities to ensure super is paid on time.

On top of this the government will set targets for the ATO for recovering unpaid superannuation.

This is ahead of the planned pay day super that is supposed to start on the 1st July 2026.

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INSTANT ASSET WRITE OFF

If your turnover is less than $10mill the $20,000 instant asset write off has been extended to 30 June 2025.

It’s important to note this $20k amount isn’t cash back in your pocket, it’s simply a tax deduction you claim now rather than over a number of years, which means you need to be making profit for this to be a benefit to you.

It would have been fantastic to see this amount increased, and of course this be permanent rather than just be extended another 12 months.

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INCOME TAX CUTS

Whilst these have already been announced, the budget started with an announcement of income tax cuts. Here is a summary of the rate cuts. In general.....if you earn :

$40,000 per year you get $13 more per week
$100,000 per year you get $42 more per week
$120,000 per year you get $52 more per week
$150,000 per year you get $72 more per week
$190,000 per year you get $87 more per week

Just over 2 hours till the Federal Budget drops. The team have our pumping ready to dive into the papers when they are released. Stay tuned for updates tonight and as usual we will have our recap out tomorrow morning unpacking all the big announcements and what they mean for you practically.

See you all at 7.30PM! 🎉💰👀 ⁠
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PAID PARENTAL LEAVE

This was announced last year but comes into play now. From 1 July 2023 Parental Leave Pay and Dad and Partner Pay will be combined into one 20 week payment that can be shared between parents. The leave will be available to both parents, and can be claimed at the same time. This also includes building in some flexibility to allow the 20 weeks to be taken when suits the parents, i.e. one parent can take 2 days per week and the other 3 days per week, as long as the combination only adds to a total of 20 weeks.

This will increase again in July 2024 to 22 weeks, again in July 2025 to 24 weeks and finally 26 weeks in July 2026.

INDUSTRY GROWTH PROGRAM

$392mill has been earmarked for the Industry Growth Program. This will be allocated over 4 years starting from 2023-2024 year. The aim of this program is to support Aussie SME’s (and startups) to commercialise their ideas and grow operations. The program will include grants as well as mentorship but will be targeted towards the priority areas of the National Reconstruction Fund. Note this effectively replaces the Entrepreneurs Programme.

SMALL BUSINESS ENERGY INCENTIVE

This one was also announced pre the budget, however the detail (as usual) is missing. Businesses with less than $50mill in turnover will be able to claim an additional 20% deduction on assets purchased that support electrification and more efficient use of energy. This will be capped at $100k total spend, ie bonus $20k deduction. Again this isn’t cash back, just a tax deduction. This will only be on assets purchased between 1 July 2023 and 30 June 2024.

This will include things like energy-efficient fridges, heat pumps and electric heating or cooling systems and demand assets such as batteries or thermal energy storage.

INCOME TAX CUTS

There has been a lot of speculation in the media on whether the previously announced stage 3 income tax cuts would go ahead. Note this isn’t due to start until 1 July 2024. As a reminder here are the differences (note this doesn’t include Medicare Levy)

At the moment you pay 32.5% tax for income between $45k and $120k, 37% on income between $120k and $180k and then 45% for amounts over $180k.

The proposed changes from 1 July 2024 would mean paying 30% tax on income between $45k and $200k and then 45% for amounts over $200k

Assuming you earn $199,000 for the year the tax saving is $11,124.27 per year.

This was already legislated and was missing from this years budget so seems to be going ahead.

PAYG INSTALMENT INCREASE HALVED

There is a lot of media talk about the PAYG and GST instalment increase being halved as a great cash boost for small business. But in reality there is actually no benefit at all for businesses.

When you make profit in your business you have to pay tax in quarterly instalments towards your next years tax. This is aways based on the overall tax you paid last year multiplied by a GDP uplift. BUT in reality the instalments you pay just go towards your actual tax bill. So whilst the increase is now only going to be 6% instead of 12% you aren't getting a reduction in the actual overall amount you need to pay.

SUPER TAX ON THOSE WITH BALANCES OVER $3MILL

So, the government is making a change to the way taxes work for people who have a lot of money in their superannuation accounts. If you have more than $3 million in Super, you'll have to pay 30% tax on earnings on the assets above that amount. You will still pay 15% on the earnings below the $3mill threshold. This will start July 1, 2025.

But don't worry, if you have less than $3 million in Super, this change won't affect you. For our SMSF clients that’s per member not per fund.

This change will affect around 80,000 people in the first year, but it's estimated to bring in an extra $950 million for the government over the next five years. However, there won't be any limit on how much money you can have in your superannuation account.

SUPER PAYABLE ON PAY DAY

At the moment employers have to pay Super for employees on a Quarterly basis. Starting from 1 July 2026 (yep thankfully a few years away) employers will be required to pay super on the same day wages are paid. So if you pay wages weekly you will need to pay Super weekly. This requires a lot of back office changes for the ATO and software providers hence the start date. This will require businesses to be all over their cashflow requirements.

Also important to note Super increases from 10.5% to 11% on the 1st July 2023 (ie in 2 months), then to 11.5% on 1st July 2024 and finally 12% on 1st July 2025. An additional 1.5% on top of your wages bill compared to now.

TEMPORARY FULL EXPENSING
At the moment if a small business purchases an asset they can claim the ‘depreciation’ on that asset in full in the year it’s purchased and ready for use. This is ending on 30th June 2023. Tonight's budget didn’t extend this, instead small businesses with a turnover of less than $10mill will be able to claim depreciation immediately on any assets costing less than $20,000. This will be in effect from 1st July 2023 - 30th June 2024. Any assets over that amount will be able to be added into the small business simplified depreciation pool which means you claim 15% of the cost of the asset in the 1st year and 30% each year thereafter.

It’s important to note this $20k amount isn’t cash back in your pocket, it’s simply a tax deduction you claim now rather than over a number of years.

T-Minus 2 hours until the moment we've all been waiting for! 🕰️ The Federal Budget for this year is about to drop, and we are buzzing with excitement. 💥 Join us tonight as we go live on Twitch for our Budget Party, where we'll be unpacking all the big announcements and what they mean for you practically. From taxes to superannuation, we've got you covered. ⁠
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So, grab your snacks and get ready for a night of financial fun (ok maybe the fun part is just for us accountants!) See you all at 7.30PM! 🎉💰👀 ⁠
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A few snippets from ! Great to see the team there. We loving supporting these events and likewise our clients! 🏄‍♂️🌊

Congratulations to on their 10 years! We’re always thankful for their continuous support and kindness 💚 Thank you for our gift and cannot wait to try them!

At Growthwise, we're all about setting and crushing our individual goals. We believe that setting goals is crucial for both personal and professional growth, which is why we've created a structure and system to help our team do just that. ⁠
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Every year, we use the MiGOALS Goal Digger Planners to set long-term goals, and break them down into manageable weekly chunks. We call it our "goal session" day, where we share our wins from the previous year, set new goals and pick accountability partners to help keep us on track. And it's not just work-related goals we focus on, we encourage the team to set goals in all aspects of their lives. But just writing down your goals at the start of the year isn't enough. We make sure to regularly check in with the team and keep each other accountable for our progress. Whether it's through our weekly check-ins, our monthly goal-sharing in our channel on Slack, or our "stretch" club, we're all in it together to make sure we're crushing our goals.⁠
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Checkout the latest post on our blog which explores how we do the above.⁠

https://www.growthwise.com.au/news/2023/goal-setting-for-your-team
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GOAL SETTING : For your team At Growthwise, we're all about setting and crushing our individual goals. We believe that setting goals is crucial for both personal and professional growt

HELPING OLDER AUSTRALIANS WHO WANT TO DOWNSIZE

The government wants to encourage more ‘older australians’ to downsize in the hope this provides more housing for younger families. If you sell your home and you are eligible for the age pension, the proceeds from the sale of your home won't be included in your pension assets test for 24 months. This was previously only 12 months.

In more exciting news downsizer contributions eligibility is now available for people aged 55+ whereas it was previously 60. To recap you can contribute $300k (each) from the proceeds of the sale of your own home into super.

FOCUS ON ENERGY JOBS

New Energy Skills program will support development of fit for purpose training pathways for clean energy industry jobs.

New Energy apprenticeships program will deliver 10,000 new energy apprentices. The apprentices will be able to claim a support payment of $10K over the duration of their apprenticeship. Includes $2k on commencement, $2k per year for up to three years and $2k on completion.

SPENDING - TRADE & TOURISM

$171.6 million over 4 years has been earmarked to support trade and tourism in Australia.
$48 million over 4 years to support recruitment & marketing in tourism and travel as well as infrastructure upgrades for caravan parks. We all know Aussies love a good camplify holiday
$100 million for participation in the world expo
$19.6 million to implement the Singapore-Australia Green Economy Agreement
$4 million to support Australia's trade diversification

WORKPLACE RELATIONS REFORMS FOR SMALL BUSINESS

Anyone who employs someone knows the complexities of awards and the fair work system. Government plans to work with small businesses, unions and workers to deliver a simpler, more accessible and fairer workplace relations system. The aim is to remove complexities, to which we say….. bring it on. Let’s hope we see some work on this soon.

SMALL BUSINESS ENERGY EFFICIENCY INVESTMENT

$62.6 million is earmarked to help support small and medium-sized businesses to improve their energy efficiency and reduce energy use. This will be delivered in the form of grants to empower investment in energy efficient upgrades.

SUPPORTING SMALL BUSINESS

Small Businesses employ more than 5 million Australians and are the backbone of many communities. The government is committed to delivering on its better deal for small businesses. This deal is to strengthen unfair contract term protections and collaborate with the small business community to address opportunities as identified at the Jobs and Skills Summit. More details no how this will impact SME’s to come.