Written by Nicola Brazier of YBM
Last week saw Treasurer Josh Frydenberg announce an extraordinary level of federal investment, in fact bringing about the largest projected budget deficit since World War II. The government’s focus is clearly on pandemic recovery and job growth, with measures announced to impact individuals and business owners alike.
- Tax relief measures include an extension of low and middle income tax offsets, while stage 2 of already legislated tax cuts have been brought forward. While these have been sold as putting more cash in the pockets of workers, keep in mind that these benefits will not be realised until income tax returns are lodged.
- There are several tax benefits for business owners, the first of which includes further extensions to immediate asset write offs. Prior to last week, small and medium businesses were able to fully expense the cost of any depreciating asset up to the value of $150,000 until December 2020. This has now been extended to 30 June 2022, and the value cap has been removed for new assets purchased and installed from 6th October. The $150,000 cap remains for the purchase of second hand business assets.
- The second tax benefit for business owners is a temporary loss carry back initiative, which allows losses incurred in 2021-22 to be used to counter profits made during or since 2018-19, potentially generating refunds. Note that this scheme is limited to corporate entities.
- Increased funding for the R&D Tax incentive scheme and changes to small business tax concessions, including FBT exemptions, may further boost businesses.
- On the jobs front, in addition to the extension of JobKeeper payments for eligible businesses, significant incentives have been introduced to encourage businesses to hire new employees. The JobMaker scheme brings $200/week credits for the hiring of jobseekers aged 16-29, and $100 credits for hiring jobseekers aged 30-35. The 50% wage subsidies for new apprenticeships and traineeships may also be attractive for several industries.
- In support of the construction industry, additional incentives have been announced for first homebuyers and changes announced regarding capital gains tax for granny flats, while The Modern Manufacturing Initiative has been topped up to drive growth and investment in priority manufacturing fields.
- Finally, the budget announcement also included regional spending, targeting regional tourism and potentially the return of water infrastructure rebates for farmers, while increased infrastructure spending should see further upgrades to our roads and community infrastructure.
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One of the lessons this year has been that, when it comes to government announcements, the devil is in the detail. Please let us know if you have any questions and we will endeavour to keep you up to date as further details are released about the above initiatives.