2020 Australian Federal Budget: What's in it for Businesses
Australian Federal Treasurer, Josh Frydenberg, delivered the 2020 Federal Budget on Tuesday 6th of October, with a number of measures aimed at helping small businesses recover from the current economic climate.
“COVID-19 has resulted in the most severe global economic crisis since the Great Depression,” said Mr Frydenberg. “COVID-19 will see our deficit reach $213.7 billion this year, falling to $66.9 billion by 2023-24. Net debt will increase to $703 billion or 36 per cent of GDP this year and peak at $966 billion or 44 per cent of GDP in June 2024.”
The Government’s response is now transitioning to ensure that the Australian economy recovers strongly by targeting additional temporary support measures to boost household incomes, bring forward business and infrastructure investment activity, and drive the unemployment rate back down.
Instant Asset Write off
The Government announced the “largest set of investment incentives any Australian Government has ever provided.” Small, medium and larger businesses with a turnover of up to $5 billion until June 2022, are set to benefit from new instant asset write off rules.
Over 99 per cent of businesses will be able to write-off the full value of any eligible asset they purchase for their business.
“It will dramatically expand the productive capacity of the nation and create tens of thousands of jobs,” said the Treasurer.
Companies that have been struggling will also be able to use their losses earlier. “Losses incurred to June 2022 can be offset against prior profits made in or after the 2018‑19 financial year,” said the Treasurer.
These measures, combined with the Government’s proposed reforms to insolvency and credit laws, aim to help Australian businesses get back to profitability and keep people employed.
JobMaker Plan
The Government’s $74 billion JobMaker Plan is a key element of the Government’s Economic Recovery Plan for Australia, designed to support a stronger economic recovery and bring more Australians back to work.
In the Federal Budget announcement, Treasurer Josh Frydenberg has announced a new JobMaker hiring credit to encourage businesses to hire younger Australians.
The JobMaker hiring credit will be payable for up to twelve months and immediately available to employers who hire those on JobSeeker aged 16-35.
It will be paid at the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35.
The program will cover new hires until 6 October 2021.
Employers will not need to satisfy a fall in turnover test to be eligible for the payments, but they cannot be concurrently claiming JobKeeper.
A JobTrainer fund has also been established. The $1 billion fund will offer up to 340,000 free or low‑cost training places for school leavers and job seekers.
Boosting apprenticeships wage subsidy
The Government will provide $1.2 billion over four years from 2020-21 to increase the number of apprentices and trainees employed and build a pipeline of skilled workers to support Australia’s economic recovery.
From 5 October 2020 to 30 September 2021, businesses of any size can claim the new Boosting Apprentices Wage Subsidy for new apprentices or trainees who commence during this period.
Eligible businesses will be reimbursed up to 50 per cent of an apprentice or trainee’s wages. The wage subsidy will support school leavers and workers displaced by the COVID-19 related downturn to secure sustainable employment.
Increase the small business entity turnover threshold
The Government will expand access to a range of small business tax concessions by increasing the small business entity turnover threshold from $10 million to $50 million. Businesses with an aggregated annual turnover of $10 million or more, but less than $50 million, will for the first time have access to up to ten further small business tax concessions in three phases.
Personal income tax cut
In this Budget, the Government is delivering an additional $17.8 billion in personal income tax relief to support the economic recovery, including an additional $12.5 billion over the next 12 months. It builds on the $8.1 billion in tax relief that will be delivered for the 2020‑21 income year under the already legislated Personal Income Tax Plan.
The income tax threshold for 19 per cent will increase from $37,000 to $45,000, and lifting the 32.5 percent threshold from $90,000 to $120,000.
For more information on the 2020 Australian Federal Budget, click here
