- Richard Jacobitz CA welcomes the investment in climate action in this year’s Australian Federal Budget while Samara Badgery FCA says there’s little in the Budget for SMEs.
- At the same time, there is no structural tax reform, leaving the government still reliant on income tax bracket creep and resource price increases.
- The increase in funding for the ATO is likely to increase the compliance burden for CAs.
The 2023 Australian Federal Budget was handed down on 10 May. Now that we’ve had some time to consider it, Acuity asked two chartered accountants for their take on the Budget, and whether their industries and clients are winners or losers this year.
The Albanese government has signalled its commitment to initiatives focused on climate change and green energy – a move that has been welcomed by Chartered Accountants Australia and New Zealand member Richard Jacobitz CA, chief financial officer of Rino Recycling, based in Queensland.
Jacobitz says the measures announced in the Federal Budget dealing with climate change and looking at the implementation of green energy are positive aspects of the Budget from his perspective.
He is interested in the establishment of the Net Zero Authority and the long list of climate-related measures that are designed to take Australia closer to meeting the net-zero target.
“That all sounds fantastic but what they do with it will be the next challenge and that will come in the next few months,” Jacobitz says, “but at least they are sending the message out and telling people this is what they are intending to do moving forward.”
There are a range of things that will need doing, Jacobitz notes, in order to get the net-zero emissions agenda moving.
“There’s a massive change coming in that space. We’ve got to convert the old industry to the new, so we are going to create an agency that is going to help focus and deliver on that,” Jacobitz says. “And we are going to support businesses that are deciding to go green so it works in their favour.”
Pictured: Richard Jacobitz CA, Rino Recycling
“We are going to create [the Net Zero Authority]… and we are going to support businesses that are deciding to go green so it works in their favour.”
Investment in climate
Financing renewable or green energy initiatives is something that is also on Jacobitz’s mind and he said he welcomes the various measures that include A$8.3 million over four years to develop green bonds, a further A$1.6 million to co-fund the creation of an Australian sustainable finance taxonomy, and A$4.3 million in the coffers of the corporate cop, the Australian Securities and Investments Commission (ASIC), to combat greenwashing.
Jacobitz says greenwashing is a concern because companies may claim to be taking action against climate change, but they are not necessarily doing so. He said investment funds should be going to people who are trying to “change the game”.
Need for structural reform
The Federal Budget did not contain any major measures of structural reform, Jacobitz observes, and that is one of the things he looks for each Budget.
He says that there was nothing in the Budget that related to tackling the goods and services tax (GST) or tackling other taxes, and that he will be waiting to see whether there are structural changes in the Budget next year.
“We haven’t tackled the fact that our funding is basically done by bracket creep and resource price increases,” Jacobitz says.
Were there any surprises in the Budget for Rino’s CFO?
“In terms of my space and what I was looking for – there were no surprises, good or bad.”
Lean pickings for SMEs
Practitioners in accounting firms see the Budget from a different perspective and Integrity Wealth director Samara Badgery FCA told Acuity that there is not much in the Budget for small business clients of firms like hers.
She said the instant asset write-off that continues to be brought back year after year is something that ought to be permanently increased from the A$1000 that sits in the law.
What people in business need and prefer, Badgery says, is certainty, and the repeated increase and decrease of the amount of an instant asset write-off over the years does not provide accountants of businesses with any certainty.
“The temporary full expensing for asset purchases ends on 30 June, which I was hoping would be extended. Instead, a A$20,000 instant asset write-off measure has been announced, but only for one year,” she says.
“Generally people agree the instant asset write-off threshold should be permanently increased. These temporary increases year after year just add administrative burden for our members and create confusion for clients.”
Pictured: Samara Badgery FCA, Integrity Wealth
“Across the profession, everyone agrees the instant asset write-off threshold should be permanently increased. These temporary increases year after year just add administrative burden for our members and create confusion for clients.”
Badgery is also disappointed that the loss carry-back measures have not been extended in the Budget because this is a period when small and medium enterprise clients will need it.
“I know more businesses struggling now than during any of the pandemic period,” she says, “so the loss carry-back rules are becoming relevant just as they’re about to end.”
Compliance burden increase
Tax agents frequently bear the brunt of compliance work and Badgery notes that the additional funding to the Australian Taxation Office (ATO) on compliance will add to the burden of practitioners because they will typically be the ones handling queries from the tax authority as a part of any compliance probes.
“I’m all for providing funding to enable the ATO to collect tax that’s owed, but I think those resources should be directed towards taxpayers who do not use a registered tax agent,” Badgery says.