The Federal Budget delivered on 6th of Oct will support many small to medium business to survive and regrow Post COVID. There were significant tax incentives announced by the Treasurer to support the businesses and put Australia back to recovery. Some of the key incentives that affect SME are:

Tax relief for individuals

The government is bringing forward stage two of its personal income tax plan by two years. From 1 July 2020:

  • the low-income tax offset will increase from $445 to $700;
  • the top threshold of the 19 per cent tax bracket will increase from $37,000 to $45,000; and
  • the top threshold of the 32.5 per cent tax bracket will increase from $90,000 to $120,000

Loss carry-back for businesses

  • The government is allowing companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid, to generate a refund.
  • Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns.
  • Normally, businesses would have to return to profit before they can use their losses, however, these measures will enable companies to bring and utilise losses instead of waiting for a profit.
  • This measure is estimated to deliver $4.9 billion in tax relief to businesses over the forward estimates, and $3.9 billion over the medium term.

Full Asset write off (no more threshold)

  • To support new investment and increase business cash flow, any assets purchased from 6th of October 2020 until 20 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
  • This is the biggest measure for small and big businesses to now write off asset instead of depreciating over the years.

Jobmaker Hiring Credit

  • The government’s new Jobmaker Hiring Credit is expected to help accelerate growth in employment during the recovery by giving businesses incentives to take on additional employees that are young job seekers aged 16 to 35 years old.
  • Under this measure, businesses will receive the Jobmaker hiring credit of $200 per week for every worker aged up to 30 and $100 a week if they hire an eligible young person aged 30 to 35 years, payable for the next 12 months for new hires who work at least 20 hours per week.
  • The Jobmaker Hiring Credit is estimated to support around 450,000 positions for young people and cost $4 billion from 2020-21 to 2022‑23.