The 2020-21 federal budget is now on the books as of 6 October, and you’d better brace yourself: we’re going full Keynesian for now. This might not be much good news for you free-market capitalist types but the Government, in its infinite wisdom, has decided to go with the biggest spending budget we’ve ever seen, with the 2021 fiscal year forecast to have a $214 billion deficit. The result? Around $480.5 billion will be departing from the Treasury’s cash balance over four-year forward estimates period.
Where’s all that money going? What’s it meant for? And how’s it going to affect your business? Don’t worry, we’ve got the details here. In fact, if you’re running a small business, there’s some very good news: the new budget is positioned specifically to help revitalise the economy in the wake of the COVID-19 pandemic, and that means help is on the way. Here’s what you can look forward to!
Small Business Entity Turnover Threshold Increase
Starting with this Budget, the Government is expanding access to a number of tax concessions for small business owners. This will be facilitated by the small business entity turnover threshold increasing to a sum of $50 million, which is a significant jump over the current $10 million figure. A fivefold increase means that around 20,000 small businesses to access these tax concessions, which have the potential to result in some serious savings for these businesses and their owners.
Temporary “Full Expensing” Deduction For Businesses
Meanwhile, any business with an aggregated annual turnover of $5 billion or less will now be able to deduct the full cost of their eligible capital assets from 6 October 2020 onward. These assets need to be first used or installed by 30 June 2022 to remain eligible for this full expensing deduction, so don’t sit on this one if you can’t help it.
Temporary Loss Carry-Back to Support Cash Flow
If you qualify, your company will be permitted to carry back tax losses from the 201-2020 income year, as well as the 2020-21 and the 2021-22 income years. This broadens the ability to offset previously taxed profits in 2018-19 or later years over a much larger space of time, ideal for offering some major tax relief for struggling companies.
JobMaker Hiring Credit & The Federal Budget
If you’re an employer, every new job you create for the next 12 months from 7 October 2020 in which you hire an eligible young person will net you access to the new JobMaker Hiring Credit scheme. This is a major scheme, as an employer will receive $200 a week if they hire an eligible worker between the ages of 16 to 29 years. This benefit decreases if your eligible hire is between 30 and 35 ears old, but you’ll still be receiving $100 a week per hire.
The Job Trainer Fund, which matches funding between state and territory governments and the Commonwealth, has been bumped up to $1 billion. This means up to 340,700 additional free or low-fee training places in areas of genuine need will be funded. This is in addition to the current $2.8 billion Supporting Apprentices and Trainees Wage Subsidy, which provides support for existing apprentices and trainees through to 31 March 2021.
Not only that, but the Government is throwing in a further $1.2 billion in a Boosting Apprenticeships Wage Subsidy, which will support up to 100,000 new apprentices and trainees through the payment of a 50% wage subsidy, up to a cap of $7,000 per quarter, for commencing apprentices and trainees at businesses of all sizes, in all industries. However, this last subsidy runs out 30 September 2021, so if employers are looking to capitalise on this to drum up some new apprentices and trainees, striking while the iron is hot is highly recommended.
Imagining the Future
All in all, the new Budget is certainly ambitious, especially when it comes to supporting small businesses as well as new workers, especially younger ones looking to take on apprenticeships or training. Hopes are high that this will help the Australian economy get back to firing once more on all cylinders. After being ravaged by the COVID-19 pandemic, more than just the local economy took a major hit; modern business meant that global economies all suffered. Now, with it time to rebuild both here at home and abroad, it’s up to all of us to set nose to grindstone and get back to work if we want to imagine a future that will be filled with success and prosperity.
Working With You to Achieve Your Goals
Here at Evergent, we know what it’s like to run a small business. Your time and money are both at a premium as you’re responsible for so much of the day-to-day running of your company; you’ve got little time to eat and sleep, let alone keep the books, but hiring a full-time accountant is out of the question, isn’t it? So you do your best to muddle through. Things is though that muddling through is a recipe for disaster. At best you’re leaving money on the table in the form of tax credits and other schemes that you might have access to; at worst, you might be accidentally racking up some serious tax liabilities! You don’t want that, and neither do we.
That’s why we’ve designed some of the most cost-efficient monthly small business packages that allow you to control your costs yet still get the assistance you need with tax planning, grant and tax credit research and development, cashflow and payroll management, and many more. And, yes, this includes strategies on how to leverage all the good news in the 2020-21 Federal Budget. Since it’s our mission to provide the freedom to small business owners that they need so dearly, we even offer unlimited ongoing support and ad hoc advice to all our small business packages.
With us in your corner, you’re sure to come out the other side of this Brave New Keynesian World together. Ready to see what Evergent can do for your small business? Contact us today!