The 2024-25 Federal Budget introduces a suite of measures designed to support and invigorate small businesses across Australia. For many small business owners, these changes will present both opportunities and challenges. Here’s an in-depth look at the key budget measures and how they might affect your business.

Tax Cuts and Financial Relief

Instant Asset Write-Off

One of the most notable changes is the extension of the instant asset write-off threshold to $20,000 until 30 June 2025. This measure allows small businesses to immediately deduct the full cost of eligible assets costing less than $20,000. By writing off these expenses immediately, rather than depreciating them over several years, businesses can improve their cash flow and reinvest in growth.

Imagine you run a small bakery. With this extended threshold, you could invest in new ovens or mixers that cost under $20,000 each, knowing you can deduct these costs right away. This not only reduces your taxable income but also means you can upgrade equipment more frequently, keeping your bakery competitive and efficient.

Energy Bill Relief Fund

The budget also includes a $325 rebate for approximately one million small businesses on small customer electricity plans. Energy costs are a significant expense for many small businesses, especially those in sectors like hospitality or manufacturing. This rebate can provide much-needed financial relief, helping to offset rising energy prices.

Every household in Australia will also receive a $300 rebate on their energy bills, starting from 1 July 2024. This initiative is part of a $3.5 billion new energy bill relief package aimed at alleviating cost of living pressures. The Treasurer emphasised that these measures help keep inflation in check by directly cutting energy costs.

Support for Mental Health and Wellbeing

New Access for Small Business Owners Programme

Running a small business can be incredibly stressful. The extended funding for the NewAccess for Small Business Owners programme is a welcome relief. This programme offers free, confidential mental health support tailored specifically for small business owners. With mental health being a crucial factor in business productivity and personal well-being, having access to such resources can make a significant difference.

Consider Jane, a small business owner who runs a local bookstore. The pressures of managing inventory, staff, and customer expectations can sometimes be overwhelming. Through the NewAccess programme, Jane can receive professional support, helping her manage stress and maintain her focus on growing her business.

Payment Times and Cash Flow

Payment Times Reporting Regulator

The budget allocates increased resourcing to the Payment Times Reporting Regulator, enhancing its ability to name and shame businesses that are slow to pay their suppliers. For small businesses, delayed payments can create significant cash flow problems. By ensuring quicker payment times, small businesses can maintain healthier cash flows, reduce financial strain, and focus on growth.

Regulatory and Legal Support

Franchising Code of Conduct

Improvements to the Franchising Code of Conduct are set to promote best practices and make it easier for small businesses to operate within the franchising sector. Enhanced dispute resolution mechanisms will help protect franchisees' interests, ensuring fairer treatment and smoother operations.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

The expansion of services provided by the ASBFEO means small businesses will have better access to assistance and advocacy. Whether it's resolving disputes or navigating complex regulations, this support can be invaluable for small business owners.

Superannuation Changes

Superannuation on Paid Parental Leave

From 1 July 2025, the government will pay superannuation on Commonwealth-funded Paid Parental Leave (PPL). This change aims to enhance the financial security of employees on parental leave, potentially improving employee satisfaction and retention.

For small businesses, this means they can offer more attractive benefits to their employees, helping to retain valuable staff members. Take a small graphic design firm, for example. By offering enhanced parental leave benefits, they can attract and retain talented designers, ensuring the business remains competitive.

Investment in New Industries

Future Made in Australia Package

The budget introduces tax incentives to encourage investment in new industries, particularly those related to renewable energy. Two notable incentives are the Critical Minerals Production Tax Incentive and the Hydrogen Production Tax Incentive, both running from 2027-28 to 2040-41.

Small businesses involved in these sectors or those supplying to them could see increased demand and new opportunities. For instance, a small engineering firm specialising in renewable energy solutions could benefit from these incentives, helping them to expand their services and client base.

Additional Budget Measures and Their Timeline

According to the Federal Budget 2024-25 Timeline document, several other measures will take effect over the coming years:

  • Increasing the Medicare Levy Low-Income Thresholds: This will help low-income earners by ensuring they are exempt from paying the Medicare levy, effective from 1 July 2023.
  • Cap Indexation on HELP Debts: Changes to the calculation of HELP indexation from 1 June 2023 will reduce the financial burden on students and recent graduates.
  • Improving Aged Care Support: Significant funding over five years to enhance aged care services, ensuring better support for older Australians.

Potential Challenges

While the budget provides numerous benefits, there are also challenges to consider.

Compliance and Adaptation

Small business owners will need to stay informed about the new regulations and ensure compliance. This may require additional administrative efforts and consultations with financial advisors. Keeping abreast of these changes is crucial to maximise benefits and avoid potential pitfalls.

Cash Flow Management

Although measures like the instant asset write-off provide immediate financial relief, businesses must manage their cash flow carefully to avoid over-leveraging and ensure sustainable growth. Strategic financial planning and regular review of cash flow projections will be essential.

The 2024-25 Federal Budget presents a mixture of opportunities and challenges for small business owners. By understanding and strategically responding to these budget measures, small businesses can not only mitigate potential challenges but also position themselves for growth and success in the evolving economic landscape. Proactive planning, staying informed, and leveraging available resources will be key to thriving in the current environment.