The delayed 2020 federal budget laid out an aggressive spending spree leaving a debt of nearly $1 trillion by the middle of 2024. All this spending is to prop up the economic impact of COVID. The main theme being jobs. Saving jobs, creating jobs and skilling people up to perform jobs. Budgets are full of spin, so this cuts to a few key outtakes for your business.
1. Subsidy for hiring new employees
The JobMaker Hiring Credit outlines subsidies for hiring a new (and importantly young) employees. You could be entitled to a subsidy lasting up to 12 months.
- $200 a week to hire an eligible person aged 16 to 29 years; or
- $100 a week to hire an eligible young person aged 30 to 35 years.
You must demonstrate that these employees have increased your overall employment. To claim the subsidy, the new employee will be submitted to the ATO via the Single Touch Payroll system.
2. Wage subsidy for apprentices
Apprentices and trainees are seen as another way to get young people back to work or into work for the first time. As an employer of an apprentice or trainee, you could receive a 50 per cent wage subsidy (capped at $7,000 per quarter). This will last up until 30 September 2021 and also includes existing workers who may want to undertake a new apprenticeship to improve or formalise their skills.
3. Temporary full expensing
The instant asset write-off rules had already been expanded since the pandemic. This reference to ‘temporary full expensing’ is essentially the same thing. The rules however have been even more relaxed with almost all assets being eligible and businesses with turnover up to $5 billion now eligible.
These encourage businesses to invest in capital equipment when they may be reluctant to do so during this period of uncertainty.
4. Temporary loss carry-back
This is a roundabout way of saying that if you incurred a loss in your business in 2020, yet were profitable before COVID hit (meaning you paid tax), you can claim a refund by almost averaging out your profits over previous years (at least back until FY 2018-19).
This applies to companies with turnover up to $5 billion and lasts up until June 2022. This could provide a nice cashflow boost, particularly for businesses in industries like tourism and hospitality who would have been most affected COVID restrictions.
5. Residential Renovations & Construction
While an incentive for homeowners, the intent of the HomeBuilder program is to support the construction industry. The HomeBuilder grant provides a $25,000 incentive for homeowners to undertake building works that are in excess of $150,000.
For builders this is an incentive to encourage hesitant customers to access this grant to help fund their new home or major renovation.
6. More for Manufacturing
The Major Manufacturing Initiative is designed to make Australia more self-sufficient in certain areas which became obvious during the height of the pandemic, in particular around personal protection equipment.
Industries looking to get government investment include defence, space, food and beverages, recycling and clean energy, medical products, resources technology and critical minerals processing industries.
7. Infrastructure investments
A sizeable $3 billion dollars will be spent on small scale road safety projects and also on local roads. This is designed to provide jobs in regional towns and local communities.
So, businesses involved in road building and related road safety projects could see an increase in work coming around the corner.
8. Easier access to finance
The new philosophy being adopted by the government is ‘borrower responsibility’ as opposed to the ‘lender beware’ system that has recently made finance for business harder to source.
The new regime is designed to significantly reduce the time taken to apply for credit and simplify the application process. These changes are designed to also allow lenders to rely on information provided to them by the business rather than extensive 3rd party verification.
The federal budget initiatives will need to be passed through parliament, however it makes good business sense to anticipate these changes and determine how your business is positioned to receive them.
Saige Accountants & Financial Planners are well equipped to advise you on how to adapt to the changing economic environment. We can help minimise tax, determine if it makes good sense to invest and ensure your businesses financial records are all in check. Talk to us about what the Federal Budget means for your business.
- For a full wrap up of the federal budget please visit budget.gov.au