The 2020 Budget was like no other we’ve had in recent memory – led prominently by tax cuts, business incentives, and infrastructure spending.
What is clear from the 2020-2021 Federal Budget is that the economic road to recovery is firmly in the Government’s sights – it’s all about jobs.
This is a Budget that puts business at the centre of that plan. If businesses are open, then Australians are in jobs and confidence is up.
So, what are the big ticket items announced on the night? In case you missed it, here is your five minute guide to the 2020-21 Federal Budget.
Income Tax Cuts
The Government announced that it will bring tax cuts forward by two years, with the effective date to be backdated to July 1 this year, for more than 11 million Australians.
It means people who earn between $45,000 and $90,000 will end up with between $1,080 and $2,160 extra in their pocket.
Business Stimulus Measures
SME’s were firmly in the Government’s sight this Budget, with a range of fiscal measures announced designed to support Aussie businesses through this next period of economic recovery.
Instant Asset Tax Write off
One of the biggest announcements for small business was the extension of the Instant Asset Write off.
As of Budget night through to 30 June 2022, businesses with a turnover of up to $5 billion will be able to write off the full cost of any eligible asset they purchase and install ready for use.
The Treasurer indicated in his speech that the new threshold will mean “99 per cent” of businesses will be benefit from the scheme.
This is very much aimed at encouraging businesses to invest.
JobMaker Hiring Credit
Eligible employers will have access to a JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for which they hire an eligible employee, for a maximum claim period of 12 months from their employment start date.
The scheme is expected to support an extra 450,000 jobs.
Small business tax concessions
Tax concessions currently available to small business with annual turnover up to $10 million have been extended to businesses with turnover up to $50 million.
Fringe Benefit Tax
The Treasurer has also announced several changes to the Fringe Benefits Tax (FBT).
Under the change, items like training courses provided by employers to re-deploy employees to different roles in the business will now be exempt. Record-keeping requirements will also be reduced for FBT.
Loss Carry Backs
The Loss Carry Back provisions announced on Tuesday night will allow companies to offset current losses against previous profits on which tax has been paid.
These changes mean any losses incurred up to June 2022 can be offset against prior profits made in the 2018-19 or later financial year.
This scheme will provide vital cashflow to the many companies who will more than likely post a loss this financial year because of lockdown measures.
If you have any questions, please contact your financial professional for advice.
UBT is a diversified business consultancy that supports clients with business-advisory and group-buying services with the objective to help businesses develop a competitive edge.
The UBT workforce is comprised of employees from both within the Plymouth Brethren Christian Church community as well as outside the community.
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