State and Federal Budget announcements for 2023-2024

The Federal Budget for 2023-2024 was announced on Tuesday 9 May 2023 and the Victorian State Budget for 2023-2024 was announced on Tuesday 23 May 2023.

We have compiled the highlights of these announcements, including how it will impact individuals, businesses, and superannuation. Most of the measures announced (excluding depreciation rates and temporary full expensing) will come into effect from 1 July 2024. We will keep you updated as more information is released.

If you have any questions about the new State or Federal Budgets and what they could mean for you or your business, please feel free to contact us.

Key Federal Budget announcements for 2023 -2024

Individuals

The Stage 3 tax cuts previously announced in last year’s budget will remain unchanged from 1 July 2024.

Businesses

Temporary Full Expensing

“Temporary full expensing” provided eligible businesses with the opportunity to claim immediate deductions for the business portion of the cost of an asset in the year it is first used. The temporary full expensing measures will end on 30 June 2023.

Small business entities

The instant asset write-off threshold will be $20,000 for small business entities.

Small business entities are entities whose aggregated turnover is less than $10 million.

Eligible assets include those that cost less than $20,000 and are used in the carrying on of a business that have been first used or installed ready for use between 1 July 2023 to 30 June 2024.

Depreciating assets that cost $20,000 or more (which cannot be written-off) can continue to use the small business pool and depreciate at a rate of 15% in the first income year and 30% each year thereafter.

Medium and large business entities

No relief has been made available for entities with aggregated turnover of $10 million or more.

Accordingly, the depreciation rules revert to the standard application, which broadly includes depreciating the asset over the effective life of the asset.

Primary producers

No changes have been made to the concessions afforded to primary producers, which include accelerated depreciation on water facilities, land care, electricity connections and phone lines, fencing assets, fodder storage assets, and horticultural plants (including grapevines).

Superannuation

Superannuation Guarantee payments
From 1 July 2026, employers will be required to pay their employees’ superannuation guarantee (SG) entitlements on the same day that they pay salary and wages.

From 1 July 2025 the following additional superannuation changes will come into effect.

Additional tax
There will be an additional 15% tax on the proportion of earnings corresponding to balances above $3m.

Earnings are calculated by taking the difference between a member’s Total Super Balance (TSB) at the start of the year and comparing it to their TSB at end of the year and then adjusting for withdrawals and contributions.

If an earnings loss is calculated, this can be carried forward and reduce a tax liability in a future year.

Tax on unrealised gains
An extension to the above is that a member’s Total Super Balance is the value in their account at year end. As all assets need to be valued at market value at year end, a member’s TSB includes unrealised gains/losses. This means the additional tax could be payable on an unrealised gain, when down the track, the asset may actually be sold at a loss.

Tax paid by members
Members can elect to pay the additional tax personally or elect their SMSF or another of their super funds to pay the tax.

Key Victorian State Budget announcements for 2023 -2024

Individuals

Land tax

Exempt properties including your home remain exempt from this surcharge. This means the value of exempt property is not included in your landholdings.

General land tax rates

Trust surcharge land tax rates

Businesses

Land transfer (stamp) duty for Commercial Property
From 1 July 2024 the buyer of a commercial property will have the option to either pay the property’s total stamp duty obligation upfront as a lump sum or choose to make fixed instalment payments (with interest) over a period of 10 years. These instalments will cover both the stamp duty amount and the applicable interest, facilitated by a government-provided transition loan.

Once a property falls under the new system (i.e. it is sold after July 1, 2024), the traditional stamp duty will no longer be required during the transaction. Instead, a new annual property tax will come into effect, which will be payable starting from 10 years after the transaction takes place.

This annual tax will be calculated at a flat rate of 1 percent based on the property’s unimproved land value.

Existing commercial property will be grandfathered until sold.

Payroll tax

There will be an increase in the Victorian payroll tax rate from 1 July 2023:

There will be an increase in the Victorian payroll tax threshold from 1 Jul 2024: