The Albanese Government delivered the 2023-24 Australian Federal Budget on Tuesday 8 May. This Budget included several measures aimed at cyber security, extending ATO compliance programs and digital transformation across government agencies.
Here's our breakdown of the Budget and where measures may impact DSPs over the next few years. DSPANZ members can access a more detailed list via the Forum.
The numbers at a glance:
- $197 million over 7 years to support the ABS's "Big Data, Timely Insights Phase 2" program
- $134.5 million in 2023-24 to continue supporting myGov
- $101.6 million over 5 years to support and uplift cyber security
- $90 million to ATO and $1.2 million to Treasury to extend and expand the scope of the Personal Income Tax Compliance Program for 2 years
- $88.8 million over 2 years for Treasury to continue operating the Consumer Data Right
- $86.4 million over 4 years to combat scams and online fraud
- $44.3 million over 4 years for the OAIC to establish a standalone privacy commissioner
- $26.9 million in 2023-24 to continue work on the Digital ID system
- $14.3 million over 4 years to support policy and legislative reforms to harden Australia against illicit financing and evaluate the anti-money laundering (AML) framework
- $1.9 million over 2 years to establish a public registry of beneficial ownership of companies and other legal vehicles, including trusts
- $1.6 million in 2023-24 to support the initial development of a sustainable finance taxonomy for classifying economic activities according to their impact on sustainability goals
- $900,000 over 2 years for the Attorney-General's Department to progress the government's response to the Privacy Act review
ATO and Treasury-related measures
The government expects to raise $9.1 billion in revenue through the following ATO initiatives:
- Extending the Personal Income Tax Compliance Program
- Extending the GST Compliance Program
- Extending and merging the Serious Financial Crime Taskforce and Serious Organised Crime program
Outside of continuing to fund the above programs, several measures will likely impact DSPs providing tax, accounting and payroll services, including:
- Amending tax law to set the GDP adjustment factor for pay as you go (PAYG) and GST instalments at 6 per cent - a reduction from 12 per cent
- Ensuring low-income earners do not pay higher amounts of Medicare levy if they receive lump sum payments (e.g. compensation for underpaid wages) and continue to be exempt from paying the Medicare levy
- Expanding the scope of the general anti-avoidance rules for income tax
- Implementing a 15 per cent global minimum tax for large multinational enterprises based on the OECD's Global Anti-Base Erosion Model Rules and also applying a 15 per cent domestic minimum tax for income years on or after 1 January 2024
- Increasing the rate for the capital works tax deduction to 4 per cent for eligible build-to-rent projects and reducing the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments and construction in the build-to-rent sector
- An updated list of deductible gift recipients for the 2024 income year and beyond
- Sunsetting eligibility of plug-in hybrid electric cars from the Fringe Benefits Tax exemption from 1 April 2025
The ATO is also receiving funding to enable them to engage more effectively with businesses to address the growth of tax and super liabilities. They'll also facilitate increased disclosure of the Australian Charities and Not-for-profits Commission's regulatory activities to increase transparency for the charity sector.
One of the most significant announcement for DSPs ahead of Budget night was the introduction of "payday super" from 1 July 2026. Payday super will require employers to pay their employee's superannuation guarantee (SG) entitlement on the same day they pay salary and wages. This will also involve changes to the design of the SG charge to align this with the increase payment frequency.
The commencement date should provide the ATO, DSPs and super funds sufficient time to implement the policy and for employers to adjust their cashflow practices. The government will consult with stakeholders in the second half of 2023 with the final design to be considered in the 2024-25 Budget.
Other super-related measures included:
- Additional resources for the ATO to detect unpaid super payments earlier, with the government setting enhanced targets for the ATO to recover super.
- Reducing the tax concessions available to individuals with a total super balance exceeding $3 million from 1 July 2025.
This Budget outlined several measures to uplift and support Australia's cyber security efforts, including:
- $46.5 million to establish the Coordinator for Cyber Security supported by the new National Security Office and resources from Home Affairs and other agencies
- $23.4 million to Treasury for delivering COSBOA's Cyber Wardens program
- $19.5 million to continue improving the security of critical infrastructure assets and assisting owners and operators with responding to significant cyber attacks
- Taking action against scams, including establishing an SMS sender ID register
The Budget provided a handful of measures specifically aimed at small businesses, including:
- A temporary increase in the instant asset write-off threshold to $20,000 for one year
- Small Business Energy Incentive enabling SMEs to deduct an additional 20 per cent of the cost of eligible depreciating assets supporting electrification and efficient energy use
- $39.6 million to continue the Single Business Service that supports SME engagement with all levels of government
- The ACCC will establish a complaints mechanism specifically for small business advocacy groups to raise systematic issues
Reforms to cut paperwork and reduce the time spent doing taxes including:
- Allowing small businesses to authorise their tax agent to lodge multiple STP reports on their behalf
- Reducing the use of cheques for income tax refunds
- Giving small businesses up to 4 years to amend income tax returns
The Budget has allocated $26.9 million towards continuing Australia's Digital ID system noting the government aims to introduce legislation later this year. This funding includes:
- $24.7 million for the Department of Finance and DTA to maintain the current system and design policy and legislative foundations
- $1.1 million for OAIC to provide ongoing assurance
- $1.1 million for ATO for communications research associated with the myGovID brand
Employment and workplace relations
The Budget recognised the continuing consultation on implementing election commitments and the Jobs and Skills summit, including items such as Same Job, Same Pay. In addition, the government will engage stakeholders in designing and implementing a national labour hire licensing scheme.
The Budget has also allocated $800,000 in 2023-24 for a review of modern awards following new gender equality and job security objects and the updated modern awards and minimum wage objectives in the Fair Work Act. This review will consider opportunities to make modern awards simpler to use.
While not directly impacting DSPs, the Budget also included measures for government agencies to modernise their IT systems, create new digital solutions and improve service delivery. Notable measures included:
- Funding for myGov over the next year for maintaining streamlined and secure digital credentials while the government considers its future funding
- Supporting the ABS to modern and replace their legacy IT systems
- $32.7 million for Treasury to support the continued delivery of key programs, statutory reviews and to upgrade ICT systems
What was missing for DSPs?
From our perspective, the Budget did not address the digital transformation projects that will be required over the next 7 years to achieve the ATO's 2030 digital strategy and make "tax just happen". DSPs are also waiting for clarity on the future of the Modernising Business Registers (MBR) program and eInvoicing.
Without clear budget allocations for the above items, DSPs will face challenges when prioritising their development roadmaps and making investment decisions. As a result, we'll be closely watching the next Federal Budget to see whether the ATO and Treasury receive funding to support these programs of work.
DSPANZ looks forward to working with DSPs and our peers in government on the consultation and implementation of these measures. We'll keep our members updated with more information as it becomes available.