Overnight, the Australian Government delivered what has been deemed the ‘coronavirus budget’, the plan to salvage our economy from the trauma that was 2020. With a strong emphasis on job creation, it was unsurprising to see that small businesses were amongst the winners in this latest budget.
Hitting education, jobs, small business, environment, infrastructure, mental health and low and middle income tax payers, this budget resulted in the largest deficit in Australia since the end of World War II. Fear not, the $213.7 billion deficit is expected to be almost halved by 2021/22, with a deficit of $112 billion.
The new budget features up to 10 tax concessions for small and medium businesses, with some key perks highlighted below:
- Businesses with a turnover of less than $5 billion (almost 99% of Australian businesses) can deduct the full cost of capital assets, provided they are purchased after 6 October and first used or installed by 30 June, 2022.
- Small and medium businesses will be eligible to apply ‘full expensing’ to second-hand assets.
- Businesses with less than $5 billion can offset losses incurred up to June 2022 against previous profits made in or after the 2019-19 financial year on which tax has been paid, generating a refund.
- The SME Loans Guarantee Scheme has been expanded to allow eligible businesses to apply for secured loans of up to $1 million and unsecured up to $250,000 with repayments made over five years.
To aid in job creation, businesses are now exempt from paying 47% fringe benefits tax on retraining employees who have been made redundant or are due to be made redundant, to take on a new role within the business. This is supplemented by the ‘JobMaker’ wage subsidy which provides a wage credit of up to $200 for new hires aged under 35.
The budget also makes a $4.5 billion investment in NBN Co and commits $29.2 million to accelerate the rollout of the 5G network, alleviating the stress of connectivity issues.
While not everyone gets a win with the budget every time, it is a relief to see a strong focus on job creation and keeping Australia’s small and medium businesses afloat.