Budget 2023 Summary

Cost-of-living measures, including up to $3bn in energy bill relief (expected to reduce power bills by up to $500 for five million households) and $1.3bn for home energy upgrades. These measures have been designed to provide relief from inflationary pressures.

Australia’s economic growth is expected to slow from 3.25% in 2022-23 to 1.5% in 2023-24 but is predicted to recover to 2.25% in 2024-25.

Inflation is expected to remain at 6% for this year, it is expected to fall to 3.25% in 2023-24 and return to the Reserve Bank of Australia’s target band of 2-3% in 2024-25, which the Treasurer stated was still higher than the Government would like.

Below are key summary points.

Cost of Living government support 

• Electricity bill relief, one of the key measures in the Budget is a $500 electricity bill relief package for eligible low-income households, delivered in partnership with the states and territories. The one-off deduction will apply to around 5.5 million households across the country.
• Boost to government payments, the almost one million Australians receiving JobSeeker support from Centrelink will also receive a modest boost to their support payment. The Budget sees the JobSeeker unemployment payment rise by $2.80 a day and the extra $40 a fortnight will also go to people on Youth Allowance, Austudy and other government payments. Commonwealth rent assistance will also increase by $31 a fortnight. Those on the government’s single parent payment will have the timeframe that they can stay on the payment extended by six years. Single parents will now be moved off the payment and on to the lower Newstart rate when their youngest child turns 14 years old, up from the earlier cutoff of eight.
• Bulk billing incentives and changes to the PBS, the government is also tripling the incentive paid to GPs to bulk bill medical consultations for families with young children, pensioners and Commonwealth concession card holders.
• Under changes to the Pharmaceutical Benefits Scheme (PBS) foreshadowed before Budget day, millions of people will be able to pick up a two-month supply of medicine from the pharmacy with a single script, for the same cost as they would normally pay for a one-month supply. The move is intended to slash the cost of essential medicines for customers as well as reducing the number of GP visits needed.

Personal Taxation 

Small Business 

• Small business instant asset write-off threshold – The threshold will be temporarily increased to $20,000 for small businesses with aggregated annual turnover of less than $10m for assets that are first used or installed ready for use between 1 July 2023 and 30 June 2024. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
• Small business energy incentive – Businesses with annual turnover of less than $50m will be able to 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.
• Small business lodgment penalty amnesty – Small businesses with aggregate turnover of less than $10m will be given an amnesty which will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022.
• PAYG and GST instalment uplift factor – The GDP uplift factor will be set at 6% (rather than 12% as would otherwise apply under the statutory formula) for instalments with respect to the 2023-24 income year that fall due after the measure is legislated.

Superannuation

• Non-arm’s length income (NALI) – the amount of non-arm’s length expenses (NALE) taxed at 45% as NALI will be limited to twice (down from a multiple of five) the level of a general expense from 1 July 2023 for SMSFs and small APRA funds. In addition, fund income taxable as NALI will exclude contributions to effectively exempt large APRA regulated funds from the NALI provisions for both general and specific expenses of the fund.
• Super account balances above $3m – despite pushback from industry, the Government has confirmed its intention to apply an extra 15% tax on total superannuation balances above $3 million from 1 July 2025, including in relation to defined benefit schemes. No further details were released so it is expected the proposed changes will operate as previously announced (ie, unrealised gains will be subject to the extra 15% tax).
• Payday super – employers will be required to pay their employees’ super guarantee at the same time as their salary and wages from 1 July 2026.
• Pension drawdowns: no reduction in minimum – the Budget did not announce a further extension to 2023-24 of the temporary 50% reduction in the minimum annual payment amounts for superannuation pensions and annuities.