The Federal Budget provides a range of programs to help small business owners recover from the impact of the coronavirus pandemic and boost business confidence. Here is an overview of the announcements that are likely to have an impact on small businesses.
- Financial incentives for employing staff
- Instant asset write-off limit to be lifted
- Tax and FBT concessions
- Digital literacy and learning
- Mental health and support
- More information
Reminder: The budget will need to be passed by Parliament and receive royal assent before a number of these initiatives become available to business owners, along with further information on how to access them. We are unable to provide more details until then.
If you missed our State Budget recap, make sure you find out what it is included means for small businesses.
Wage subsidy for apprentices and trainees
The Federal Government has announced $1.2 billion for the Boosting Apprenticeship Commencements Wage Subsidy program, which will cover 50 per cent of wages, up to $7,000 per quarter for 12 months, paid to an eligible apprentice or trainee between 5 October 2020 and 30 September 2021.
JobMaker Hiring Credits
Incentives to hire new employees aged between 16 and 35 who work at least 20 hours per week will be made available via the JobMaker Hiring Credits program. You can receive a JobMaker Credit of $200 per week for employees aged up to 30 years of age and $100 per week for employees aged between 30 and 35. The credit is payable for 12 months for new eligible employees. Read the JobMaker Hiring Credit fact sheet to find out more.
Small businesses will be able to write-off the full value of assets purchased before June 2022 under proposed changes to the instant asset write-off. Find out how the program works and how you could benefit.
Personal income tax decrease
The tax rate for individuals will be reduced and the lower rates of tax will be backdated to July 2020. Read this fact sheet to find out more about the proposed rates of reduction.
FBT and other small business tax concessions
Fringe benefits tax (FBT) and broader tax concessions will be rolled out in three stages to eligible businesses with an aggregated annual turnover of between $10 million and $50 million.
- From 1 July 2020: Some start-up expenses and certain prepaid expenditure will be able for immediate deduction.
- From 1 April 2021: There will be an exemption on the 47 per cent fringe benefits tax on car parking and multiple work-related portable electronic devices, including phones or laptops, provided to employees.
- From 1 July 2021: You will be able to access simplified trading stock rules, remit pay-as-you-go (PAYG) instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods. Eligible businesses will also have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.
Loss carry back provision
Eligible businesses will be able to temporarily offset current tax losses against previous profits and tax paid to claim a refund as part of your business tax return. Under the provision, taxes on profits in or after the 2018-19 financial year can be offset against losses during the 2020-21 or 2021-22 financial years.
Download the tax fact sheet for a summary of all of the tax related budget announcements.
R&D tax incentive
$2 billion has been committed to the research and development (R&D) tax incentive. From 1 July 2021, the refundable R&D tax offset will be 18.5 percentage points above your company tax rate. The proposed $4 million cap on R&D tax incentive refunds has also been withdrawn.
In addition to further investments in the NBN and 5G networks, $24.7 million has been committed to the Australian Small Business Advisory Services – Digital Solutions (ASBAS-DS) program. This program provides low cost access to advice and training to help businesses improve their digital literacy.
The Federal Government has committed $4.3 million to Beyond Blue’s NewAccess service, which provides mental health support for small businesses in partnership with the Australian Small Business and Family Enterprise Ombudsman.
Visit the Budget website for more details on the 2020-21 Federal Budget.
If you have any questions about tax planning or business finance, speak to your accountant or tax professional.