Federal Budget 2023: Top Implications for Small Business Owners

Talk of the national budget can either bring hope or despair. After all, it affects everyone in the community in one way or another. 

As a small business owner, you might ask, “How will this affect my business?” when looking at the current federal budget.

Here’s everything you need to know about the Australian Federal Budget for 2023 and how it could affect you as a business owner.

What You Need to Know About Australia’s 2023 Federal Budget

On 9 May 2023, Treasurer Jim Chalmers passed his second budget for funding the federal government’s projects and aid for the citizens of Australia.

These adjustments were made to encourage economic growth and address other important issues. 

Here are some of the industries and key measures that will be affected by this new budget.

Small Business Energy Incentive

The government is encouraging the use of renewable energy by providing incentives to new users.

They hope to have most businesses shift to more eco-friendly practices in their industries.

Petroleum Resource Rent Tax

Also known as the PRRT, its increase can mean a loss for oil industries because of the profit tax on offshore petrol sources.

However, they will decrease the Fuel Tax Credit for heavy on-road vehicles to alleviate the pressure it puts on the general public.

Environment Protection

The federal government encourages businesses to upgrade their equipment for more efficient energy use.

Environment Protection Australia will continue to enforce laws and promote transparency in their decision-making.

The government will also continue to fund related projects, such as the Commonwealth National Parks and other incentives to encourage environmental care.

Tax Relief

The General Anti-Avoidance Rule helps reduce personal income tax rates to provide a better cost of living relief to the people.

They are accessing a lower withholding tax rate on the income paid to foreign residents. This will also affect the domestic minimum tax and help alleviate locals’ taxes.

It would be best for businesses to seek advice regarding any transactions affected by these adjustments.

Facts and Figures from the 2023 Federal Budget

The government expects that many industries will benefit from the budget for this financial year.

Around $15 billion was committed to the National Reconstruction Fund, one of the largest investments in manufacturing. This will help create jobs and business opportunities for many people.

Meanwhile, the Energy Price Relief Plan aims to provide immediate help with power bills.

The Capacity Investment Scheme is also planned for clean energy generation and storage.

These efforts by the parliament house to distribute hundreds of millions of dollars across programs and sectors aims to provide financial support to those who need it, such as small business owners.

Winners and Losers of the 2023 Federal Budget

These specific groups and industries are the winners and losers of the Federal Budget for 2023.

Winners

The following groups will experience some benefits of this year’s budget:

• Small Businesses: An instant asset write-off threshold will be increased starting 1 July 2023 to help reward business owners. The Industry Growth Program will provide grants and advice these start-ups to better commercialise their ideas. Small and medium businesses are also encouraged to upgrade their equipment for energy efficiency and are eligible for incentives. However, they may still require alternative sources of funding like Lumi to become eligible. 
• Low-Income Renters: The Commonwealth Rent Assistance (CRA) supplement will financially support eligible households. It will also create loans and funds for social housing via community housing providers with the support of the National Housing Finance and Investment Corporation. Those who receive maximum Commonwealth Rent Assistance will also benefit significantly from these adjustments.
• Select Welfare Recipients: Jobseekers, youth allowance, Austudy, and partnered parenting payment will all receive benefits co-funded by the government to alleviate daily costs. This includes pensioners, senior health card holders, and family tax benefit A and B recipients.
• Electricity Bills: Pensioners, concession card holders, and veterans will receive subsidies to help pay their utilities.
• Doctors, Aged-Care Workers, and People Who Need Healthcare: Funding has been allocated for new Medicare urgent care clinics, raises for the struggling aged-care sector, and more. The bulk-billing incentive will allow doctors to choose to bulk-bill for more common consultation types. Medication listed on the Pharmaceutical Benefits Scheme will also be halved, allowing people to afford necessary medicines.
• Single Parents: They used to be required to file for job seeking once their youngest dependent child reached the age of 8 to receive the single parenting payment. It will be increased to 14.

Losers

While some can benefit, others might feel no change or a disadvantage from this year’s budget:

• Tobacco and Vape Users: The government will raise the tax revenue by $3.3B to encourage quitting among its citizens. According to Health Minister Mark Butler, the tobacco excise will increase by 3% for the next three years starting this September.
• Scammers: To address the scams and fraud cases, the government has increased funding to identify them. An additional amount was allocated for a SMS sender ID registry to stop scammers from impersonating part of the national messaging system.
• Middle-Income Renters: People who don’t qualify for low-income support payments but aren’t financially secure might not feel the immediate effects of cost of living relief.
• Oil and Gas Companies: They’ll need to pay an extra $2.4B in PRRT for any offshore liquefied natural gas projects for the next four years.

FAQs

You might have more questions about the Federal Budget for 2023.

We’ve gathered the most common ones to help you with your research.

How Can My Business Qualify for the Small Business Energy Incentive?

You must provide proof that your business supports efficient energy use and electrification. It can require upgrades of equipment, excluding electric vehicles.

Your grant may not meet the forward estimates for your business’s budget, so you might want to consider alternative funding options like Lumi. 

Lumi can provide small businesses with flexible loans within a business day. It could help you stay up-to-date and remain eligible for the long-term benefits the government can provide.

How Can the Australian Income Tax Benefit Affect Small Businesses?

The Income Tax Benefit is for business income tax purposes and can help offset the tax payable for your business.

It entails tax deductions of up to $ 1,000 annually, which can help lessen any deductions from a business income.