July marks the beginning of a fresh financial year (2023/2024), bringing about several important changes that impact both agents and small businesses. Let’s take a look at the key changes you need to be aware of:
Boosts for Businesses:
Small business technology investment boost – eligible businesses can claim a 20% bonus deduction on technology expenditure to help digitise their small business.
Small business energy incentive – eligible businesses can claim an additional 20% deduction on spending that supports electrification and more efficient use of energy.
*Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024. This measure is not yet law.
Full Expensing Changes
The temporary full expensing rules will be coming to an end on June 30,2023. There is no more extension to temporary full expensing, and from 1 July 2023, depreciating assets are required to be written off over their effective lives for tax purposes. For small business entities using simplified depreciation, the cost threshold of an asset for instant write-off reverts to $1,000 for the first time since 12 May 2015 when it was increased to $20,000 and continuously extended and increased since then.
End of Loss Carry Back:
The temporary COVID-19 measure, Loss Carry Back, ended on 30 June 2023. Any corporate tax entity with an aggregated turnover of less than $5 billion that made a tax loss in 2022–23 can choose to carry that loss back against taxed profits made from 2018–19 to 2021–22. The refundable income tax offset is available by lodging the 2023 income tax return.
Increase in Superannuation Guarantee Rate and Timing Rules:
The rate of compulsory super that employers must pay eligible workers rose from 10.5% to 11% from 1 July 2023. Under the current legislated timetable, the Super Guarantee (SG) rate will continue to rise incrementally by 0.5% each financial year to 12% by 1 July 2025.
Car Expenses and Work from Home Expenses:
- The cents per kilometre rate for car expenses increased to 85c per kilometre for 2023–24. This increases the rate from 78c per kilometre that applied for 2022–23.
- The ATO allows 4.2c per km for electric vehicle home charging from 1 July 2022.
- Working from home expenses can be claimed at a rate of 67c per hour, and a record of actual hours worked from home must be kept since 1 March 2023.
As always, the team at MWM Advisory are here to help guide you through these changes and to bring your plans to fruition in the year ahead.