The recent budget has provided a range of positive outcomes for small to medium Australian businesses. Overall, the small business community has expressed they are pleased with the initiatives.
“This budget delivers substantial benefits for small business owners in five key areas, namely: business tax relief, simplifying compliance with Australia’s IR laws, encouraging continued investment in digital commerce, and creating a national agency to accelerate recovery from ever-frequent natural disasters”. Council of Small Business Organisations Australia (COSBOA) CEO Peter Strong
Read on to see if your business will benefit or discuss the below possibility with your accountant directly.
Corporate Tax Cuts
From July 1, 2021 the corporate tax rate will reduce from 27.5% to 25%.
Full Expensing Scheme
Businesses earning less than $5B annually will be able to leverage the temporary ‘full expensing’ scheme until June 2023. This means businesses can immediately write off any eligible asset as a tax deduction rather than depreciating it over a number of years.
Companies with losses due to COVID-19 will be able to write off these defects for an extra 12 months against taxed profits. This is limited to small to medium businesses with turnovers less than $5B.
Intangible Asset Depreciation
To encourage investment in more intangible assets (such as patents and software) businesses can now depreciate the economic life of these items. This will give some businesses tax relief for large expenses.
Expansion of Small Business Loan Scheme
The government has extended the Small and Medium Enterprise (SME) Recovery Loan Scheme. It is available for businesses with turnovers of up to $250m and that were recipients of the JobKeeper scheme. It offers loans up to $5M over 10years and an increased government guarantee of 80 per cent.
Digital Economy Investment
$1.2B has been dedicated to enhancing Australia’s digital capabilities. This includes a $12.7 million extension to the Digital Solutions — Australian Small Business Advisory Services program where small businesses can access free advice.
Further, the government has flagged large spending on upskilling professionals in the digital space, and supporting businesses implement e-invoicing.
To support more Australian businesses employ workers, the government has committed $134.6M over four years to reducing the regulation burdens regarding employing new staff.
Support for Industries
Small breweries will receive increased tax relief to encourage more entrants into the growing market. Brewers and distillers will be eligible for up to $350,000 worth of tax refunds.
The Digital Games Tax Offset supports businesses by offering a 30% refund on eligible expenditure. Businesses will need to spend over $500,000 to qualify.
MedTech Business and Start Ups
A new Patent Box Tax Regime has been announced to encourage investment in medical and biotech innovations. The scheme will reduce the tax rate for eligible companies to 17% and is designed to encourage the medtech industry to stay and thrive in Australia.
We recommend speaking with your accountant to see how your business can benefit from the latest federal budget initiatives.