What the 2024 Federal Budget holds for small to medium enterprises

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The 2024 Federal Budget has unveiled a comprehensive package of measures designed to support small to medium enterprises (SMEs) in Australia, while also laying the groundwork for a “Future Made in Australia.” The budget focuses on easing cost pressures, boosting productivity, and enhancing confidence within the SME sector, while simultaneously investing in clean energy, strategic industries, and advanced manufacturing to position Australia as an indispensable part of the global economy.

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Instant asset write-off extension and energy bill relief

At the heart of the budget’s support for SMEs is the extension of the instant asset write-off scheme and the introduction of a $325 energy bill rebate. The instant asset write-off, initially introduced as part of the COVID-19 stimulus measures, has been extended by the Labor Government for an additional 12 months until 30 June 2025. This extension allows small businesses with an aggregate annual turnover of less than $10 million to immediately deduct the full cost of certain assets, provided the cost of the asset is less than $20,000 and the asset was first used or installed ready for use by 30 June 2025.

The instant asset write-off applies to each individual asset, enabling small businesses to instantly write off multiple assets. For assets that cost more than $20,000 and therefore do not qualify for the instant asset write-off, businesses can place them in the small business simplified depreciation pool, where they can be depreciated at a rate of 15% in the first year and 30% for each subsequent year. The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will remain suspended until 30 June 2025, providing greater flexibility for SMEs.

In addition to the instant asset write-off extension, small businesses will be eligible for a $325 rebate on their 2024-2025 energy bills, providing much-needed relief for SMEs facing rising energy costs.

Investing in a Future Made in Australia

While the instant asset write-off extension and energy bill rebate provide immediate support for SMEs, the 2024 Federal Budget also lays the foundation for a “Future Made in Australia” through significant investments in clean energy, strategic industries, and advanced manufacturing.

The Government has revealed $22.7 billion of long-term spending on clean energy and strategic industries as part of its Future Made in Australia plan. This includes an $835.6 million investment over the next decade and $66.8 million per year from 2034-35 to 2036-37 to establish the Solar Sunshot program administered by the Australian Renewable Energy Agency (ARENA). The program aims to support the development of a local solar panel industry.

The budget also includes significant investments in critical minerals and green hydrogen, with at least $7 billion in government assistance over the next 11 years for the critical minerals sector and around $8 billion over the next 11 years for green hydrogen production. These investments are primarily in the form of production tax incentives, planned to run from 2027-28 to 2040-41.

The Future Made in Australia plan also includes $1.5 billion over seven years to support renewables and clean technology projects, $1.7 billion over a decade in the Future Made in Australia Innovation Fund, and $549 million over eight years to support domestic battery manufacturing, all managed by ARENA.

Additional Changes

In addition to the instant asset write-off extension, energy bill relief, and investments in the Future Made in Australia plan, the 2024 Federal Budget includes funding for several other initiatives aimed at supporting SMEs:

  1. Australian Small Business and Family Enterprise Ombudsman: The Ombudsman will receive $2.6 million in funding over four years to support unrepresented small businesses in using alternative dispute resolution to navigate business-to-business disputes.
  2. eInvoicing network: The Australian Taxation Office will receive $23.3 million in funding to continue operating the secure eInvoicing network, which aims to disrupt payment redirection scams and increase productivity for SMEs.
  3. Paid Parental Leave scheme administration: To support the expansion of the Paid Parental Leave scheme, another $10 million in funding over two years to assist small businesses in administering the scheme.
  4. Small business helplines: The Government will provide $10.8 million over two years to extend the Small Business Debt Helpline, which offers financial counselling, and the NewAccess for Small Business Owners program, which offers mental health support for small business owners.
  5. Franchising Code of Conduct: The Government has set aside $3 million over two years to implement its response to the Review of the Franchising Code of Conduct. It will update the Franchising Code of Conduct before its expiration in April 2025 and investigate the feasibility of a licensing model and remaking and updating the code.

Conclusion

The 2024 Federal Budget strikes a balance between providing targeted, immediate support for SMEs and broader investment in the future of Australia’s economy through clean energy, strategic industries, and advanced manufacturing. By extending the instant asset write-off, providing energy bill relief, and allocating funding for various initiatives, the budget aims to ease cost pressures, boost productivity, and enhance confidence within the SME sector. By embracing the “Future Made in Australia” plan, the Government aims to position the nation as a global leader in renewable energy and critical minerals, while also supporting the growth and resilience of small to medium enterprises. The success of these initiatives will be crucial in shaping Australia’s economic landscape in the years to come. It is up to SMEs to decide how to capitalise on the opportunities presented by the budget.

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