The Federal Budget announced a number of business incentives with the view that it will make it easier for businesses to invest, create jobs, and quickly respond to challenges and opportunities.

Business incentives

Immediate expensing

The Government is providing a temporary tax incentive for over 99 per cent of businesses, to support new investment and increase business cash flow. From 6 October 2020 until 30 June 2022, businesses with a turnover 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. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.

Loss carry-back (temporary)

Companies with turnover up to $5 billion can now offset losses against previous profits on which tax has been paid, to generate a cash refund. Loss carry-back will be available to around 1 million companies. Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns.

Extending instant asset write off

Businesses with a turnover of up to $500 million can instantly write-off multiple assets worth up to $150,000 each. They will have until 30 June 2021 to use or install assets purchased.

New ‘Jobmaker’ subsidy

Under the new scheme, businesses who hire eligible young people aged between 16-29 years will receive $200 a week or $100 if the young person is aged 30-35 years. Eligibility of the young person depends on whether they were receiving JobSeeker, Youth Allowance or the Parenting Payment for at least one of the three months before they were hired. It must also be a new job, and the employee must work at least 20 hours a week. The JobMaker Hiring Credit is a key part of the Government’s JobMaker Plan to boost Australia’s economic recovery.

Extension of small business tax concessions

Tax concessions have been extended to businesses with a turnover up to $50 million (up from $10 million previously). The business incentives allows access to up to a number of small business tax concessions, provides tax relief and reduces red tape for businesses.

10 different concessions are available and include:

  • Immediate deductions for eligible start-ups and eligible prepaid expenditure
  • Businesses are now exempt from paying the 47% FBT on retraining provided to employees who have been made redundant, or would soon be made redundant, so they can be given a new role in the business.
  • From 1 April 2021, exemptions from FBT on car parking and phones/laptops for employees
  • From 1 July 2021, simplified stock trading rules, remit pay as you go instalments based on GDP adjusted notional tax, settle excise duty and excise-equivalent customs duty monthly on eligible goods, a two-year amendment period for income tax assessments for income years starting from 1 July 2021 (down from four years)

FBT record keeping

Employers can now use existing corporate records, rather than prescribed records, to complete their fringe benefits tax (FBT) return. This measure will substantially reduce the time employers and employees spend on record keeping.

Prioritising small business owner’s mental health

$6.5 million in 2020-21 will be provided to support mental health of small business owners and the financial wellbeing of small businesses impacted by COVID-19. This includes a $4.3 million budget commitment to expand current mental health program ‘NewAccess’ which provides access to free one-on-one telehealth sessions with specially trained mental health coaches.

If you have any questions about how these initiatives affect you, please speak to your Taxpro accountant by calling 08 9240 7629 or email Chloe at admin@taxproaustralia.com.au to set up an appointment.

For a full insight into this year’s Budget visit here 

 

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