Budget 2020/21

Businesses win! in Budget 2020/21

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Wow what a win for businesses!

If ever there was a time for a “break glass in case of emergency” budget, this was it & they have done just that, provided options to support businesses & encourage expansion.

Small business is the backbone of our economy. The Morrison Government will continue to support our small and medium sized businesses as part of our economic recovery plan.

Treasurer: Josh Frydenberg MP

Businesses will be able to claim an immediate deduction of the full value of all new, eligible, depreciable assets of any value that are first used or installed before June 30, 2022.

Businesses will also be able to claim full deductions for the cost of improvements made to existing depreciable assets.

From 7.30pm EST, October 6 2020 to June 30 2022

Business: up to $5 billion in annual turnover

Companies will be allowed to offset losses against previous profits on which tax has been paid, to generate a refund.

Eligible companies can carry back tax losses from the 2019-20, 2020-21 or 2021-22 income years to offset previously taxed profits in 2018-19 or later income years.

Companies may elect to receive a tax refund when they lodge their 2020-21 and 2021-22 tax returns.

Companies: up to $5 billion in annual turnover

Amendments will allow businesses with less than $50 million aggregated annual turnover to access up to 10 small business tax concessions.

  • 1 July 2020 – access to immediate tax deduction for start up costs and some prepaid expenditure
  • 1 April 2021 – car parking and multiple work-related portable electronic devices are FBT exempt
  • 1 July 2021 – access to simplified GST and trading stock rules, 2 year amendment period, PAYGI on GDP adjusted notional tax and special excise rules.

From 7 Oct 2020 employers who hire eligbile employees: aged between 16-29 will receive a $200 hiring credit paid quarterly in arrears and and $100 per week for those aged between 30-35.

Eligible employees are required to work a minimum of 20 hours per week.

Eligible employers will need to demonstrate an increase in overall employee headcount and payroll for each additional new position created.

Treasury estimates that this will support around 450,000 jobs for young people.

Businesses that take on a new apprentice or trainee will be eligible for a 50% wage subsidy starting 5 October 2020 until 30 September 2021, up to $7,000 per quarter.

The subsidy is capped at 100,000 workers

The $1.2billion subsidy will be available to employers of any size or industry.

More than 11 million taxpayers will get a tax cut backdated to 1 July this year as the government brings forward “Stage 2” tax cuts to 1 July 2020.

In 2020-21, low- and middle-income earners will receive tax relief of up to $2,745 for singles, and up to $5,490 for dual income families, compared with 2017-18 settings.

Result: The bottom threshold of the 19 per cent income tax bracket increased from $37,000 to $45,000 & threshold of 32.5% will also increase from $90,000 to $125,000

For small claimants (turnover less than $20 million), the refundable R&D tax offset will increase and there will be no cap on annual cash refunds.

For larger claimants, the intensity test will be streamlined and the non-refundable R&D tax offset will be increased.

The cap on eligible R&D expenditure will be lifted from $100 million to $150 million per annum. These changes apply from 1 July 2021 and are expected to support more than 11,400 companies that claim the incentive.

An additional $2 billion is being invested through the Research and Development Tax Incentive.

Infrastructure investment announced in the Budget now totals $14 billion in new and accelerated projects over the next four years. The projects are expected to support 40,000 jobs during their construction.

There is also an additional $3 billion for small scale road safety and the Local Roads and Community Infrastructure Program supporting a further 10,000 jobs. Funding will be provided to state and local governments on a ‘use it or lose it’ basis.

Starting on 1 January 2021, changes to the insolvency framework would enable more Australian small businesses to quickly restructure.

This is part of the recently announced cutting red tape initiatives to the insolvency framework.

$1.5 billion in new funding will be invested over the next four years to make Australian manufacturers more competitive through the economic recovery from COVID-19.

The major part of the initiative will support projects within six National Manufacturing Priorities, including resources technology and critical minerals processing; food and beverage; medical products; recycling and clean energy; defence; and, space.

The JobTrainer Fund will provide approximately an additional 340,700 training places to help school leavers and job seekers access short and long courses to develop new skills in growth sectors and create a pathway to more qualifications. Courses will be free or low fee in areas of identified need.

More information

Budget 2020-21 – Economic Recovery Plan

Boosting Apprenticeships – fact sheet

Supporting Apprentices

Help me!

For more information & how these changes may assist you.

Please contact me, Julie Cohen 93447799 or email: info@thehorizongroup.com.au

Simple! Smart! Different!

This information is intended to provide general information only and has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before acting on such information, you should consider the appropriateness of the information

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