Cash flow support for small businesses will come through a halving of the adjustment factor applied to Pay As You Go (PAYG) and GST instalments, federal budget papers reveal, as part of a suite of tax measures the government says will protect SMEs in a tough economic climate.
Under the new plan, a 6% GDP adjustment factor will apply in the 2023-2024 income year, replacing the 12% factor of the current statutory formula.
Halving the planned uptick to quarterly income tax and GST payments “better reflects the economic conditions currently faced by the sector,” budget documents state.
The plan “strikes a balance between improving cash flow for small businesses and managing income tax and GST liabilities.”
Eligible businesses must already fall under current PAYG and GST instalment eligiblity thresholds: $50 million and $10 million in aggregate annual turnover, respectively.
Some 2.1 million small businesses fit within those criteria, budget papers say.
The measure is one of two primary initiatives introduced by the 2023-2023 federal budget to improve small business cash flow.
The second is a year-long extension of the instant asset write-off scheme, which will allow small businesses to instantly deduct the full cost of depreciable assets under $20,000.
To see SmartCompany‘s full budget coverage, click here.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
Comments