Federal Budget 2024-25 snapshot and what it means for businesses

The overall economic and fiscal outlook:

• Forecasted real GDP growth of 2% in 2024-25
• Expected average inflation rate of 2.75% in 2024-25

With the aid of a $9.3 billion surplus, some of the key measures designed to ease cost-of-living pressures include:

• $300 electricity bill rebate for all Australian households
• Stage 3 personal tax cuts from 1 July 2024, with an average annual tax cut of $1,888 (or $36 a week)
• Personal income tax compliance program extended for one year from 1 July 2027
• 10% increase in Commonwealth rent assistance
• Payment of $5,000 to help meet the costs of leaving a violent relationship
• Payment of superannuation on paid parental leave
• Investment of up to $3 billion to strengthen the pharmacy sector and keep medicines cheaper

The Budget offers little in the way of significant support for small businesses, with the extension of the instant asset write-off being a notable exception. Aside from this extension, it has been reported that business owners have expressed disappointment with the limited relief on energy costs ($325 electricity bill rebate for one million businesses) and the absence of initiatives to stimulate innovation and technology adoption.

Small businesses with aggregated turnover of less than $10 million will be eligible for the $20,000 instant asset write-off for an additional year. This will enable small businesses to immediately deduct eligible depreciating assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. From 1 July 2025, the asset cost threshold will revert to $1,000.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly deduct the cost of multiple assets.

Assets valued at $20,000 or more (which cannot be immediately deducted) 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.

As part of the Budget, the Federal Government has allocated $22.7 billion over the next decade to the “Future Made in Australia” initiative. The bulk of this will be directed towards tax incentives for renewable hydrogen and critical minerals processing. This includes $1.7 billion to support innovation, commercialisation, pilot and demonstration projects in priority sectors. The Government has indicated that this measure aims to provide immediate relief and encourage investment in business assets.

In summary, the Labour Government has stated that the 2024-25 Australian Federal Budget strives to balance key economic priorities amidst challenging circumstances. While efforts to alleviate cost of living pressures and drive innovation are evident, the level of support for small businesses appears to have fallen short of expectations.

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