Federal Budget 2023-24: Impact on Retail & Hospitality Businesses

On Tuesday, 9th May 2023, the federal government released its budget for 2023-2024. While the budget addressed the cost of living crisis for disadvantaged groups and focused on industries like aged care and defence, the amount of support and initiatives for small and medium-sized businesses (SMBs) was minimal. 

The lack of support for SMBs is disappointing, if not all that surprising, due to the vast economic pressures facing sectors across the country.

However, it’s not all bad news. Some of the initiatives announced will provide welcome financial relief and boost cash flow for thousands of retail and hospitality businesses. 

To cut through the noise, we’ve nailed down the most important details for small businesses and how you can benefit directly from each policy.

6 ways the new budget directly impact retails and hospitality

1. $20,000 instant asset write-off
2. Small business energy incentive
3. Energy bill relief
4. Business tax compliance
5. Digital resiliency and cybersecurity program
6. Change to student visa work hours

1. $20,000 instant asset write-off

From 1 July this year, the instant asset write-off threshold will sit at $20,000. 

Businesses with an annual turnover of $10m or less will be able to instantly deduct the entire cost of assets that cost less than $20,000. The asset must be installed or ready for use between 1 July 2023 and 30 June 2024.

The $20,000 threshold applies to each individual asset, so businesses can buy and write off multiple assets as long as each one costs less than $20,000.

How does this impact your business? 

This is a surprise win for businesses, as the previous budget slated this initiative to end in June this year.

While the $20,000 instant asset write-off cap is significantly less than in recent years, retail and hospitality businesses can still take advantage of the scheme and write off multiple new assets over the next financial year.

For hospitality businesses, assets such as kitchen equipment, furniture, coffee machines, printers, computer equipment, and technology such as iPads and tablets can all be written off under the scheme.

Similarly, for retailers, assets such as furniture, computer equipment, and tech items can all be written off – as long as each item costs less than $20,000.

It’s predicted this scheme won’t be renewed for the next financial year, so if you’re looking to make any big asset purchases, this is the time to do it. 

2. Small business energy incentive

Businesses with an annual turnover of $50 million or less will be eligible for a bonus tax discount when they purchase energy-efficient equipment that supports electrification and more efficient use of energy.

Businesses will be able to deduct 20% off the total cost of eligible assets. The maximum that can be claimed through the incentive will be $20,000, meaning businesses can spend up to $100,000 on energy-efficient equipment.

The measure is expected to help up to 3.8 million SMBs, at a cost of $314 million to the government over the next four years.

How does this impact your business?

This is a great incentive for small businesses that are looking to upgrade their electrical equipment or who want to move away from non-electrical appliances, such as those powered by gas.

Hospitality businesses are the big winner here. Numerous kitchen appliances are eligible for the 20% deduction, including white goods, like energy-efficient fridges and induction cooktops.

Retail businesses looking to capitalise on the incentive can install new electrified heating and cooling systems. And those retail businesses that sell chilled and frozen goods can purchase new energy-efficient fridges and freezers under the scheme.

3. Energy bill relief

The federal government, in partnership with state governments, will provide up to $3 billion in energy bill relief to eligible households and small businesses. While households will receive up to $500 in rebates, businesses can expect to receive up to $650. 

How does this impact your business?

The energy bill relief scheme goes some way in easing the pressure of rising energy bills for small businesses, with up to one million SMBs set to benefit from the energy bill rebate in the next two years.

4. Business tax compliance 

The government has worked with the ATO on several tax compliance initiatives that aim to make life easier for businesses and improve their cash flow.

• The GST and PAYG uplift has been reduced from 12% to 6% to assist with business cash flow.
• The ATO will forfeit outstanding failure-to-lodge penalties for late tax payments going back to late 2019 in a bid to encourage businesses to get up to date on their tax returns.
• From mid-next year, accountants and tax agents will be able to file multiple Single Touch Payroll forms on their client’s behalf, rather than employers having to complete the process each month.
• From mid-2025, small businesses will also be granted up to four years to amend their income tax returns

How does this impact your business?

The GST and PAYGE uplift reduction is set to have a moderate impact on business cash flow, and the government predicts it will positively impact 2.1 million small businesses.

While some of the other tax compliance changes aren’t set to come into force for at least another 12 months, they’re slated to make life easier for small business owners, reducing the amount of time they need to spend on tax and administrative duties each year.

5. Digital resiliency and cybersecurity program

The Cyber Wardens Program focuses on digital resiliency and cybersecurity, with a $23.4 million investment to equip small businesses with the skills to improve their cyber safety and protect customer data.

How does this impact your business?

Cybersecurity is a real threat to businesses, with big corporations like Optus and Medibank falling victim to data leaks in the past 12 months. 

For small businesses, a cybercrime attack can cause significant financial and reputational damage.

With an increasing number of SMBs going digital – from online shopping to digital loyalty programs – cybersecurity should be a top priority for businesses that store customer data such as email addresses and phone numbers.

The Cyber Wardens Program, launched by the Council of Small Business Organisations Australia (COSBOA), will help SMBs build their resilience to cyber threats by training in-house cyber experts and will become Australia’s first cyber safety workplace certification.

6. Change to student visa work hours

From 1 July 2023, work restrictions for student visa holders will be reintroduced. The cap on the number of hours international students could work (40 hours per fortnight) was lifted during the pandemic to ease the staff shortage crisis. 

While the cap is being reintroduced, the limit will rise from 40 hours per fortnight to 48 hours per fortnight – effectively allowing student visa holders to work an extra shift per two weeks.

How does this impact your business?

If you employ student visa holders, it’s important to ensure that your business complies with the visa conditions of your employees. This means from 1 July 2023, you can’t roster student visa holders for more than 48 hours per fortnight.

There is no limit to the combination of hours student visa holders can work each week as long as it’s under the 48 hour cap per fortnight. For example, a student visa employee could work 16 hours one week and 32 the next.

No matter what work visa your employees hold you must continue to follow Australian workplace law. Overseas workers, including international students, have the same rights under Australian workplace law as all other employees.

The information in this article was accurate at the time of publishing, May 10, 2023. For more information, please visit the Federal Budget website.