The ‘ace in the hole’ federal budget 2023-24 was the $4.2bn surplus, the first in 15 years. The surplus was caused because of a surge in corporate and individual tax take. The push of corporate and individual tax receipts is because of high commodity prices, high employment, and inflation. In 2023-24, it is expected that the budget will deliver a deficit of $13.9 billion and in 2024-25, it might be $35.1bn.

Social initiatives dominated the Budget:

  • Relief from energy bills for some homes and small businesses
  • Increasing Commonwealth rent assistance
  • Increasing JobKeeper and other income support payments
  • Encouraging doctors to offer bulk billing by tripling the incentive for children under 16 and pensioners and other Commonwealth card holders
  • Expansion of access to the single parenting payment

The stage 3 tax cuts that were set to go into effect on July 1st, 2024, are still in place. By combining the 32.5% and 37% rates into a single 30% rate for people making between $45,001 and $200,000, Stage 3 drastically reduces the complexity of the tax brackets. The quick asset write-off will let small businesses write off several assets totalling up to $20,000 in the year of purchase.

What was not included in the budget?

The loss carry back regulations for businesses were not mentioned, indicating that they will also expire on June 30, 2023, along with the interim full expensing rules. Instead of carrying tax losses forward to subsequent years, qualifying corporations may use them to offset taxable earnings from certain prior income years under the loss carry back provisions.

There is no mention of Division 7A’s simplification, which would apply in cases where shareholders obtain corporate earnings through loans, payments, or debt forgiveness. To lessen Division 7A’s compliance burden, improvements were proposed in the federal budget for 2016–17. Originally scheduled to take effect on July 1, 2018, these reforms were postponed several times before the government declared that they will take effect on January 1 of the income year that follows the date they obtain royal assent. With the exception of a Treasury discussion paper published back in October 2018, this problem is still unresolved.

The budget also doesn’t indicate either the technology investment boost or the skills and training boost. The previous government announced these measures that would give a bonus deduction equivalent to 20% of qualifying expenditure if the legislation having these measures is passed in its current form. The Technology Investment Boost aims at expenses incurred between 7:30 pm (ACT) on March 29, 2022, and June 30, 2023. The skills and training boost aims at expenses incurred between 7:30 pm (ACT) on March 29, 2022, and June 30, 2024.