Federal Budget 2023-24 Summary of tax and superannuation measures

The major tax-related measures announced in the Budget included:

• Small businesses instant asset write-off threshold: to be increased to $20,000 for 2023-24 for businesses with aggregated annual turnover of less than $10 million. The $20,000 threshold will apply on a per asset basis

• Small Business Energy Incentive: businesses with annual turnover of less than $50 million 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: will be provided for small businesses with aggregate turnover of less than $10 million to encourage them to re-engage with the tax system. The amnesty 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

• Small business unpaid tax and super: additional funding from 1 July 2023 to assist the ATO to engage with taxpayers who have high-value debts over $100,000 and aged debts older than 2 years where those taxpayers are either public and multinational groups with an aggregated turnover of greater than $10 million, or privately owned groups or individuals controlling over $5 million of net wealth

• PAYG and GST instalment uplift factor: 6% for 2022-23 (being lower than the 12% rate that would otherwise have applied under the statutory formula)

• Part IVA: scope of the general anti-avoidance rules to be expanded to catch two additional types of schemes from 1 July 2024, regardless of whether the scheme was entered into before that date

• FBT rules for electric vehicles (EVs): the eligibility of plug-in hybrid electric cars will sunset from 1 April 2025 from the FBT exemption for eligible electric cars

• Managed investment trust (MIT) withholding tax concession for data centres and warehouses: the "clean building" managed investment trust withholding tax concession will be extended to data centres and warehouses that meet the relevant energy efficiency standard, where construction commences after 7:30 pm AEST on 9 May 2023

• Build-to-rent properties: for eligible new build-to-rent projects where construction commences after 7:30 PM AEST on 9 May 2023, the Government will:

1. increase the rate for the capital works tax deduction (depreciation) to 4% per year

2. reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30% to 15%

• Base Erosion and Profit Shifting (BEPS) Two Pillar Solution: announced start dates are:

1. 15% global minimum tax for large multinational enterprises with the Income Inclusion Rule (IIR) will apply to income years starting on or after 1 January 2024 and the Undertaxed Profits Rule (UTPR) applying to income years starting on or after 1 January 2025

2. 15% domestic minimum tax will apply to income years starting on or after 1 January 2024

• Petroleum Resource Rent Tax (PRRT): LNG and gas transfer pricing - the Government has proposed to cap the use of deductions from 1 July 2023 to the value of 90% of each taxpayer's PRRT assessable receipts in respect of each project interest in the relevant income year and apply after mandatory transfers of exploration expenditure. Projects would not be subject to the cap until seven years after the year of first production or from 1 July 2023, whichever is later. The cap will not apply to certain classes of deductible expenditure in the PRRT

• PRRT - meaning of "exploration" and "mining, quarrying and prospecting rights": to be amended in response to Shell Energy Holdings Australia case, applicable to all expenditure incurred from 21 August 2013. Will also restore the policy intent of the law and apply in respect of all mining, quarrying and prospecting rights (MQPRs) acquired or started to be used after 7:30 pm AEST on 9 May 2023

Superannuation measures

The superannuation measures include:

• 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 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 $3 million: the Budget confirmed the Government's intention to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025

• 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.