This week, the Australian government announced the 2021 Federal Budget. Coined the ‘once in a generation’ budget, the good news is that this year’s subsidies and tax cuts centre on business. After the economic uncertainty and limitations of 2020, the Budget proposes multiple support measures to assist SMEs to maximise cash flow and boost employment.
Here’s a snapshot of the big announcements for business so far:
Businesses with a turnover of up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. It means that an asset’s cost will be fully deductible upfront rather than being claimed over the asset’s life. This initiative – termed Temporary Full Expensing – is a big incentive for businesses to accelerate investment this year.
Temporary Loss Carry-Back
Companies with a turnover of up to $5 billion will be able to offset (‘carry-back’) losses against previous profits on which tax has been paid to generate a refund. This measure relates to Temporary Full Expensing (described above). The amount carried back can be no more than the earlier taxed profits, limiting the refund by the company’s tax liabilities in the profit years. This tax refund will be available on election by eligible businesses when they lodge their 2020-21 and 2021-22 tax returns.
JobMaker Hiring Credit
Eligible employers can apply for JobMaker Hiring Credit for each new job created for young people over the 12 months from 7 October. Employers must show they have increased their overall employment. If your business is eligible, you could receive:
- $200 per week if you hire an eligible employee aged 16 to 29 years or
- $100 per week if you hire an eligible employee aged 30 to 35 years.
Apprentice & Trainee Subsidy
Eligible employers can apply for a wage subsidy of 50% of an eligible apprentice or trainee’s wages paid until 31 March 2021. Previously only for small businesses, now medium-sized businesses will be eligible for this subsidy, for wages paid from 1 July 2020 to 31 March 2021. This scheme is capped at 100,000 apprenticeships – so capitalise on it quickly if it suits your business.
Fringe Benefits Tax (FBT) Exemption for retraining and reskilling workers
Currently, FBT applies when a business provides a benefit to an employee that is not directly related to their current role. In the 2021 Federal Budget, the Government has proposed a FBT Exemption for employer-provided retraining and reskilling for employees who are redeployed to a different role in the business. This is just one example of the tax concessions available to small business. If your business has an annual turnover between $10 million to $50 million, you can apply for up to ten different small business tax cuts. Details to come.
NSW Business Grants
There is an array of business grants available in NSW for start ups and small business. If you’re interested in finding out if your business is eligible to apply, check out this succinct overview from Business Australia.
Personal Income Tax Cuts
As predicted, Stage 2 of the planned income tax cuts has been brought forward by two years. Whether you are a sole trader or a small business owner with numerous employees, it’s important to understand how your income as your own employee will be affected this year. Subject to the passage of legislation, as of 1 July 2020 the government:
- Will increase the top threshold of the 19% tax bracket to $45,000 (from $37,000)
- Will increase the top threshold of the 32.5% tax bracket to $120,000 (from $90,000)
- Will increase the low income tax offset from $445 to $700
Confused about how this helps your business?
If keeping up-to-date with the latest financial news such as the announcement of the 2021 Federal Budget is not your thing, leave it to us. Contact your Client Manager or, alternatively, call us for a chat 1300 996 928 or write to firstname.lastname@example.org with any questions. We are here to support you to rebuild your business.