FY25 budget guide for business and employers

For business, the Government is picking winners through targeted public investment with its Future Made in Australia Framework that they are betting will pave the way for private investment in net zero transformation and the strengthening of Australia’s domestic economic resilience.  

There are a few opportunities for businesses to take advantage of the FY25 budget initiatives. This is especially relevant for small business owners, film production companies, or businesses within the renewable energy sector.

$325 energy relief for small business

Around one million small businesses will receive $325 off their energy bills over 2024–25. The support will apply as an automatic quarterly credit to energy bills.

Costing $3.5bn over three years from 2023-24, the measure extends and expands the Energy Bill Relief Fund.

$20k small business instant asset write-off extended

Small businesses, with an aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025. This measure extends the 2023-24 Budget announcement to the 2024-25 financial year. 

“Immediately deductible” means a tax deduction for the asset can be claimed in the same income year that the asset was purchased and used (or installed ready for use).  

If the business is registered for GST, the cost of the asset needs to be less than $20,000 after subtracting the GST credits that can be claimed for the asset. If the business is not registered for GST, it is less than $20,000 including GST.

The write-off applies per asset, so a small business can deduct the cost of multiple assets.

The rules only apply to assets that fall within the scope of the depreciation provisions. Expenditure on capital improvements to buildings that falls within the scope of the capital works rules is not expected to qualify.

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to
be placed into the small business simplified depreciation pool and depreciated at
15% in the first income year and 30% each income year thereafter if the asset has been acquired by a small business entity that chooses to apply the simplified depreciation rules.

The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will continue to be suspended until 30 June 2025. 

The increased small business instant asset write-off announced in the 2023-24 Federal Budget is not yet law. Senate amendments proposed increasing the threshold from $20,000 to $30,000 and expanding the measure to apply to medium entities.

The Future Made in Australia initiative 

The Government has announced a bold initiative to make Australia a “renewable energy superpower.” 

The $22.7 billon series of initiatives is designed to foster and encourage significant private sector investment into priority industries necessary to harnessing the economic and industrial benefits of the move to net zero and securing Australia’s place in a changing global economic and strategic landscape.

The Future Made in Australia Act will establish the policy framework - the focus will be on industries in which Australia has a genuine economic advantage, where it contributes to an orderly path to net zero, where it builds on the capabilities of the people and regions and improves Australia’s national security and economic resilience. 

Time-limited tax incentives

As part of the Future Made in Australia initiative,  the Government will provide an estimated $19.7 billion over ten years from 2024–25 to accelerate investment in Future Made in Australia priority industries including renewable hydrogen, green metals, low carbon liquid fuels, refining and processing of critical minerals and manufacturing of clean energy technologies including in solar and battery supply chains.

This includes two time‑limited tax incentives to invest in new industries: 

• Critical Minerals Production Tax Incentive from 2027-28 to 2040-41 to support downstream refining and processing of Australia's 31 critical minerals to improve supply chain resilience.
  
  • the production incentive will be valued at 10% of relevant processing and refining costs
  • applicable for up to 10 years per project for production between 2027-28 and 2039-40 by projects that reach final investment decisions by 2030.
    
    
• a Hydrogen Production Tax Incentive from 2027-28 to 2040-41 to producers of renewable hydrogen to support the growth of a competitive hydrogen industry and Australia's decarbonisation.
  • The incentive will be $2 per kilogram of renewable hydrogen produced for up to 10 years per project for production between 2027-28 and 2039-40 by projects that reach final investment decisions by 2030.
  • Details are subject to consultation. 

The tax incentives are proposed to be in effect from the 2027–28 to the 2040–41 income years.

Funding measures

The Government is getting into business with industry to encourage investment in select areas:

• $10.2 million in 2024–25 for pre-feasibility studies for critical mineral common-user processing facilities in partnership with state and territory governments to enhance Australia’s capacity to process critical minerals, sovereign capability and economic resilience.
• $1.3 billion over ten years from 2024–25 (and an average of $151.6 million per year from 2034–35 to 2038–39) for an additional round of the Hydrogen Headstart program to bridge the green premium for early-mover renewable hydrogen projects.
• $17.1 million over four years from 2024–25 (and an additional $2.5 million in 2028–29) to deliver the 2024 National Hydrogen Strategy, including hydrogen infrastructure planning, social license and industry safety training and regulation.
• $1.5 billion over seven years from 2027–28 (and an average of $125.0 million per year from 2034–35 to 2036–37) to the Australian Renewable Energy Agency to invest in renewable energy and related technologies.
• $1.7 billion over ten years from 2024–25 for the Future Made in Australia Innovation Fund (administered by the Australian Renewable Energy Agency), to pilot and demonstration projects and early stage development in priority sectors, including renewable hydrogen, green metals, low carbon liquid fuels and clean energy technology manufacturing such as batteries. 
• $1.4 billion over 11 years from 2023–24 (and $66.8 million per year from 2034–35 to 2036–37) to support manufacturing of clean energy technologies including solar and battery manufacturing.
• $20.9 million over four years from 2024–25 (and $1.2 million per year ongoing) to undertake further consultation on incentives to support the production of, and demand for, low carbon liquid fuels.
• $18.1 million over six years from 2024–25 for foundational initiatives to expedite the emergence of Australia’s green metals industry.
• $11.4 million over four years from 2024–25 (and $1.1 million per year ongoing) to fast track the initial phase of the Guarantee of Origin Scheme for green hydrogen and bring forward work on green metals, including iron, steel and aluminium.

Film producer tax offset

The Producer Tax Offset is a refundable tax offset for Australian expenditure in making Australian films when certain conditions are met. The amount of the offset is:

• 40% of the company’s qualifying Australian production expenditure (QAPE) on a feature film
• 20% of the company’s total QAPE on a film that is not a feature film.

The minimum duration requirement differs depending on the format of the production.

As part of the Government’s announced National Cultural Policy, it will make the changes to the Producer Tax Offset from 2025–26 to remove:

• The minimum length requirements for content
• The above-the-line-cap of 20% of total QAPE.

Small business support services

The Government has announced $41.7 million in funding over four years from 2024–25 for a series of initiatives to support small businesses:

• Improving payment times to small businesses - increased resourcing for the Payment Times Reporting Regulator so that it can deliver its expanded functions, which include naming slow paying businesses.
  
  
• Mental health and financial wellbeing of small business owners –
  • Extending the NewAccess for Small Business Owners program, which provides tailored, free and confidential mental health support.
  • Extending the Small Business Debt Helpline.
    
    
• Franchising sector code changes - In response to the 2023 Schaper Review of the Franchising Code of Conduct, the Government is providing $3 million to:
  • Remake and improve the Code.
  • Promote best practice conduct between franchisors and franchisees.
  • Make it easier for small businesses to operate in the sector including through better access to dispute resolution.
    
    
• Access to justice - $2.6m in funding to the Australian Small Business and Family Enterprise Ombudsman. The ASBFEO assists and advocates for small businesses including helping to resolve disputes.

WLM can help

This is general advice only and does not take into account your financial circumstances, needs and objectives. Information is current at the date of issue and may change.

Before making any decision based on this article, you should assess your own circumstances or seek advice from your financial adviser and accountant.

Please contact us if you would like to review your current position and take advantage of the FY25 budget opportunities.