This week, Treasurer Josh Frydenberg delivered the Federal Budget. Positioned as means to ‘secure Australia’s recovery’ from the impact of COVID-19 last year, the Budget delivers numerous key measures to support small and medium businesses. The Budget stimulus focuses on tax cuts, job creation and support services to fuel recovery pathways for businesses across the country.
The Australian economy is reportedly rebounding at record-rate from the second half of 2020. The Government forecasts the economy will exceed its pre-pandemic level of activity in early 2021. Consumer sentiment is at its highest level in 11 years and business conditions are reaching a record high. Although uncertainty lingers, here at Dexterous we maintain a positive and constructive view for 2021 that the Federal Government’s outlook reflects.
Tax cuts and incentives extended
The headline news from the 2021-22 Federal Budget announcement for businesses is undeniably the extension of tax breaks and incentives until 1 July 2023. Key schemes introduced last year, including Temporary Full Expensing and Temporary Loss Carry, are both set to continue. In addition, the tax rate for small and medium businesses will drop to 25% from 1 July 2021 (versus 26% in 2020-21).
- Temporary Full Expensing: Businesses with an aggregated turnover of up to $5 billion can continue to deduct the full cost of eligible depreciable assets of any value in the year they are installed. This depreciation measure means that the asset’s cost will be fully deductible upfront rather than being claimed over the asset’s life. This measure continues to be a huge opportunity for eligible businesses to invest in software, technology, vehicles, plant or equipment.
- Temporary Loss Carry Back: Companies with a turnover of up to $5 billion will be able to offset (‘carry back’) losses against previous profits on which tax has been paid to generate a refund. This measure relates to the Temporary Full Expensing (described above) and the JobMaker Fund extension (outlined below). The amount carried back can be no more than the earlier taxed profits, limiting the refund by the company’s tax liabilities in the profit years. This tax refund will be available on election by eligible businesses when they lodge their 2020-21 and 2021-22 tax returns.
In addition, the SME Recovery Loan Scheme is set to be extended until 2023. This scheme is available to SMEs, self-employed individuals and not-for-profit organisations with a turnover of up to $250 million whom were recipients of JobKeeper (4 January 2021 to 28 March 2021) or located in eligible LGAs affected by the floods in March 2021.
Skilled labour shortage measures
The Federal Government also seeks to address the ever-present and growing issue of dwindling skilled workers for businesses. To address this common concern, the 2021-22 Federal Budget aims to bolster the workforce by continuing to fund existing skills and training schemes.
- JobTrainer Fund Extension: Launched in 2020, this program incentivises businesses to hire job seekers, school leavers and young people for training places in skill-shortage areas. $500 million committed by the Federal Government will create a further 163,000 places and extend the scheme until 31 December 2022.
- Apprenticeship Boost: 170,000 new apprenticeships and traineeships will be funded by $2.7 billion to extend the existing Boosting Apprenticeship Commencements program. This program (capped at $7,000 per quarter per apprentice/trainee) pays businesses a 50% wage subsidy over 12 months for newly commencing apprentices or trainees by 31 March 2022.
- Expanding Local Jobs Program: $213.5 million will fund the extension and expansion of the Local Jobs Program. This program helps job seekers at a local level (such as mature age workers made redundant during the pandemic) connect to employment, reskilling and upskilling courses.
- Supporting Women in the Workforce: Whilst the female participation rate in the Australian workforce is currently 1.2% higher than pre-pandemic rates, it remains 10% less than men. To lift this rate, the Government pledged further financial support to households with young children. $1.7 billion is slated to subsidise childcare to enable more women to return to, or increase their participation in, the workforce. This funding will support a total of 300,000 hours of work per week (or 40,000 women working an extra day per week).
Digital and data revolution investment
Following increased adoption of digital solutions from businesses throughout the pandemic, the Budget includes significant investments in digital infrastructure to support the evolution of the country’s digital economy. Therefore, your business take advantage of the following services and measures to streamline operations and embrace cloud-based technology solutions that can save time and money.
Firstly, small businesses will be supported to adopt digital technologies through a $12.7 million expansion of Digital Solutions – Australian Small Business Advisory Service. This service is available to help you adopt digital solutions to achieve operational efficiencies and therefore create business growth. For example:
- Moving to sell your products or services online through your website
- Updating your small business software. The Budget includes $15.3 million to drive business uptake of e-invoicing.
- Advice on online security and data privacy to protect your business and customers from fraud or threats
Secondly, the announced Deregulation Agenda claims to help “unlock business investment and create jobs”.
$134.6 million is set to be invested in digital solutions to make it easier for businesses to employ people and reduce the regulatory burden for businesses interacting with government. For example:
- Digitisation and streamlining the use and sharing of data will save businesses time and money.
- Greater flexibility for business communications through technology neutral corporations, credit, superannuation and insurance laws.
- New technology to facilitate small businesses’ compliance with modern awards.
- Automatic Mutual Recognition of occupational licensing for people working in multiple states.
Confused how this helps your business?
If keeping up-to-date with the latest financial news such as the latest federal budget is not your thing, leave it to us. Contact your Client Manager, call 1300 996 928 or write to email@example.com with any questions. We are here to support you to continue to pave a pathway towards business recovery.