Businesses balancing the budget

Energy price relief, an instant asset write-off extension, and additional measures to address cost of living were included in the Federal Budget and may provide a boost for Australia’s 2.5 million small to medium businesses (SMEs).

At ANZ, we know how important SMEs are to Australia’s economy and welcome the government’s steps to support this critical sector. The budget’s inclusions are designed to address the pressures in the economic environment which are placing stress on households and businesses alike.

The budget package included initiatives aimed at easing burdens on SMEs created by a high cost and high inflation environment, while also seeking to stimulate growth and investment.

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Our round-up of the measures and potential impacts most relevant to the SME sector include:

Potential business impact: increased cashflow, greater investment

Instant asset write-off – The government extended the $20,000 instant asset write-off for businesses until 30 June 2025, providing $290 million in cash flow support for up to 4 million small businesses. The instant asset write-off allows eligible businesses to make an immediate tax deduction claim for the business portion of the cost of an asset, such as a forklift or computer, in the year it is first used or ready for use.

Recent debate has surrounded the threshold, with calls from the Coalition to increase it to $30,000, while industry group’s argue it should extend to $150,000. While an increase has not eventuated, the $20,000 threshold should provide much needed cash flow relief.   

A Future Made in Australia – The government’s ‘Future Made in Australia’ plan seeks to boost further investment in clean energy and advanced manufacturing. It is aimed at helping small business to ‘grasp the opportunities of our transforming economy.’ Although specific measures are yet to be detailed, they’re likely to be more relevant to businesses working in renewable energy supply chains.

Potential business impact: cost reductions

Energy Bill Relief Fund - Energy price increases are a reality for many businesses as demonstrated by analysis which highlighted annual electricity bills for SMEs increased by about $540 (8 per cent) between October 2022 and October 2023.

The budget included $3.5 billion in energy bill relief. From 1 July all Australian households will receive an energy rebate of $300 and around 1 million eligible small businesses will receive $325. This initiative will be welcomed by business owners amid ongoing energy price volatility.

It will be important for any business owners looking to benefit from the scheme to understand where, when and how energy is being used to inform decision making around how best to use and manage energy.

Potential business impact: increased consumer spending, revenue uplifts

Stage-three tax cuts – commencing from 1 July the stage-three tax cuts will deliver a reduction for all taxpayers. Time will tell if they go far enough to provide financial relief, but we already know cost of living is a significant issue for many Australian households and has impacted consumer spending across many industries.

For example, ANZ’s latest national and state household spending insights for the week ending 20 March 2024 showed restaurant spend growth remained negative year on year. Similarity, accommodation spend growth was also negative compared to last year.

We’ll need to wait to understand how effective this cost-of-living focused budget has been in curbing inflation and expenses. However, it’s not only the responsibility of governments to assist businesses achieve their goals.

Our focus is also on providing customers with timely and appropriate access to finance. We’re investing in our digital, data and people capabilities to better understand and quickly respond to customers’ needs.

Although overall our customers remain resilient, we stand ready to assist with measures for those who find themselves in turbulent times. And we’ll look for further ways to support the SME sector as economic conditions evolve.