In a response to increasing cost of living pressures, the Labor government’s second budget has put the spotlight on easing the impacts of rising inflation and driving wage growth. It is clear the Government is committed to achieving responsible and targeted relief for the Australian community at large, by building a stronger and more sustainable care economy.

A range of measures were announced to provide timely benefits for individuals. From financial relief to cope with the cost of electricity, to higher welfare payments for parents, jobseekers, students and those seeking rental assistance, increases in wages for aged care workers and a record tripling of the Medicare bulk-billing system.

The Budget balances investments in health, cost-of-living relief, and aged care with the need to stimulate productivity without adding to our inflationary pressures.


The Government has announced multiple support measures aimed to increase investment and decrease administrative burden for Australian small businesses, with a particular focus on improving cashflow and improving business efficiency.

PAYG Instalment Changes

The Government has announced an amendment to set the GDP adjustment factor for pay-as-you-go (PAYG) and GST instalments at 6% for the 2023-24 income year, a reduction from 12% under the current statutory formula.

The change to the GDP adjustment rate will apply to small businesses and individuals who are eligible to use the relevant instalment methods up to $10 million aggregated annual turnover for GST instalments and $50 million aggregated annual turnover for PAYG instalments. This discount in the GDP adjustment rate reflects wider economic conditions, particularly the high inflation rate and tightened small business cash flows.

Temporary increase in the Instant Asset Write-off

The current temporary full expensing incentives are set to expire on 30 June 2023, reverting the Instant Asset Write off threshold back to the legislative threshold of $1,000. The Government has subsequently announced a temporary increase of the Instant Asset Write-off threshold for another year. Small businesses with an aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.

Small Business Energy Incentive

As announced at the end of April, the Government aims to introduce the Small Business Energy Incentive program to encourage small and medium-sized businesses to reduce energy costs and lower emissions. Under this program, businesses with an annual turnover less than $50 million will be able to access an additional 20% deduction on spending that supports electrification and more efficient use of energy. Total expenditure up to $100,000 will be eligible for this incentive, with the maximum additional tax deduction being $20,000 per business. Eligible assets or upgrades must be first used or installed ready for use between 1 July 2023 and 30 June 2024.

Reduction in Small Business Administrative Burden

The Government has provided funding to the ATO to lower tax related administrative burdens for small businesses including:

  • An 18-month trial extension from 1 July 2024 expanding the ATO independent review process to small businesses with an aggregated turnover between $10 million and $50 million subject to an ATO audit
  • Improved access for small businesses to tax advice and assistance from 1 January 2025 through establishing five tax clinics. Funding eligibility will be extended to TAFE institutions to improve access in regional areas

Further, the measure also delivers reforms to reduce administrative requirements and time managing taxes including:

From 1 July 2024

  • Small businesses will be permitted to authorise multiple single touch payroll forms for lodgement on their behalf
  • The ATO will reduce its use of cheques to provide faster, safer and cheaper income tax refunds

From 1 July 2025

  • Permitting small businesses to apply the standard four-year amendment period for income tax returns, reducing the burden of making revisions

The Government announced it will require superannuation guarantee contributions to be paid by employers at the same time as their employees’ salary and wages. This measure was previously announced by the Treasurer on 2 May 2023 and is proposed to commence on 1 July 2026. The Treasurer stated that by switching to payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5% better off at retirement.

Employers must currently pay super guarantee contributions on a quarterly basis by the 28th day after quarter end.

The proposed measure will mean employers must align their super guarantee contributions payments with their payday. When compared to the current requirement of four payments per year (based on quarters), this is a large increase in super payment frequency, regardless of which payroll frequency an employer uses.


In line with the Government’s approach to cost-of-living relief, the Treasurer has announced an increase in the Medicare levy low-income threshold from 1 July 2022. This increase will apply to singles, families, seniors and pensioners.

The thresholds where taxpayers do not pay Medicare levy will increase as follows:

  • Singles – from $23,365 to $24,276
  • Families – from $39,402 to $40,939
    • For each dependant child or student, the family income threshold will increase by a further $3,760, an increase from the previous amount of $3,619
  • Single seniors and pensioners – from $36,925 to $38,365
  • Family seniors and pensioners – from $51,401 to $53,406

The Government also announced that taxpayers who receive lump sums of income in arrears from their employers (for example, because their wages were previously underpaid), will no longer need to pay Medicare levy on those amounts, where they would otherwise be low-income earners based on the above thresholds. This amendment will apply from 1 July 2024.


The Government has confirmed its intention to reduce tax concessions for members with total superannuation balances of more than $3 million. The headline tax rate will increase up to 30% – double the existing 15% tax currently being paid by members of superannuation funds not in retirement phase.

The proposal to increase tax on superannuation balances greater than $3 million will be effective 1 July 2025 and will also apply to defined benefit schemes, with interests being appropriately valued and earnings taxed in a similar way to other interests.


With a clear target of lowering the cost of living for struggling Australians, the Budget includes a number of substantial welfare incentives and relief measures aimed at low-income and disadvantaged individuals. Whilst there was little comment on tax relief for low- and middle-income earners, plans to expand the welfare system and pensions are set to take a sizeable portion of the Budget.

Working Age Payments

The Government will increase the base rate of working age and student payments by $40 per fortnight to JobSeeker and other allowance payments commencing on 20 September 2023. It will also extend eligibility for the existing higher single JobSeeker payment rate for recipients aged 60 years and older to recipients aged 55 years and older.

Pharmaceutical Benefits Scheme changes

Individuals will be allowed to buy twice as many common medicines for the price of one script under changes to the Pharmaceutical Benefits Scheme from 1 July 2023. This will allow a patient access to 60 days’ worth of medicine for each script.

The change will save general patients up to $180 a year per subsidised prescription. Concession card holders are expected to save up to $43.80 a year per medicine.

Increased bulk billing: Children under the age of 16, pensioners and other Commonwealth concession cardholders will have increased access to free healthcare under this measure, with bulk billing incentives being tripled for the most common consultations. This includes face‑to‑face, telehealth and video conference consultations.

Energy bill relief: An electricity bill credit of up to $500 will be available in 2023/24 for:

  • Pensioners
  • Commonwealth Seniors Health Card holders and other concession card holders
  • Recipients of Carer Allowance and Family Tax Benefit A and B
  • Veterans, and those eligible for existing State and Territory electricity concession schemes.

Eligible small businesses will receive a credit of up to $650. The amount of the credit will vary depending on the location, with no further details revealed in the Budget.

Household energy upgrades

Several low-cost loans will be provided to access energy-saving home upgrades, such as battery-ready solar panels, modern appliances and other energy efficiency improvements.

Personal taxation

No changes to personal income tax: The Budget did not contain any measures announcing changes to personal income tax. This includes:

  • no changes to the Stage 3 tax cuts which will take effect from 1 July 2024, and
  • no extension of the Low- and Middle-Income Tax Offset, which ended 30 June 2022

Changes to the Paid Parental Leave scheme

From 1 July this year, Parental Leave Pay and Dad and Partner Pay will combine into a single 20‑week payment. A new family income test of $350,000 per annum will see nearly 3,000 additional parents become eligible for the entitlement each year. The Government has committed to increase Paid Parental Leave to 26 weeks by 2026.


Changes to eligibility for home buyer guarantee schemes. From 1 July 2023, joint applications may be made by friends, siblings and other family members under the First Home Guarantee and the Regional First Home Buyer Guarantee. Non‑first home buyers who have not owned a property in Australia in the last ten years will also be eligible.

Eligibility for the Family Home Guarantee is also expanding to include eligible borrowers who are single legal guardians of children such as aunts, uncles and grandparents. The number of guarantees available and other eligibility criteria are unchanged.

Build-to-rent projects encouraged.

Build to rent (BTR) projects will see a boost, with the government pledging to accelerate tax deductions and reduce the managed investment trust withholding tax rate. According to the budget documents, “this measure will encourage investment and construction in the build-to-rent sector, expanding Australia’s housing supply.”

Applicable to projects consisting of 50 or more apartments (or dwellings) that are made available to the general public for rent, the government has stipulated that dwellings must be retained under single ownership for at least 10 years. Landlords must also offer a lease term of at least three years for each dwelling in the development.

In practice, that means any eligible new build-to-rent projects where construction commences after Budget Night (7:30pm 9 May), the government will increase the rate for the capital works tax deduction – the depreciation – to 4 per cent, per year. The government will also reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30 per cent down to 15 per cent, from 1 July 2024.

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