This week we bring you our analysis of the ways in which the recent Budget will impact on businesses. The main avenue for assisting business is an expansion of the instant asset write-off scheme that has been in operation for a few years now. Support for employment is also expanded – and there is even a little bit of support for businesses that try to help staff who they have had to make redundant.

Last week we wrote about support for individuals and households. Please look back on last week’s edition if you would like to see more detail about how the 2020 Budget helps households.

To learn more about the 2020 Budget, please feel free to visit here: budget.gov.au. Unless we state otherwise, this is where we have obtained our data from.

Cuts in Corporate Tax Rates

While they are not strictly a change from this recent Budget, the reductions in corporate tax payable by companies with turnover of less than $50 million (subject to a few more criteria) will continue to fall. These rates will be:

Financial year Base Rate Entity
(Turnover less than $50m)
All other companies
2018-19 and 2019-20 27.5% 30%
2020-21 26% 30%
2021-22 25% 30%

 

Instant Asset Write-Off

Depreciation schedules are fast becoming unnecessary! This change is really the largest the Commonwealth is making in terms of assistance to businesses.

Once the Budget has been passed, any business with turnover of less than $5 billion can instantly write-off the full purchase value of any new (that is, not second-hand) asset that was acquired from 7:30pm 6th October 2020 to 30 June 2022.

Businesses with turnover of less than $50 million can also apply this write-off to all assets new to the business (which includes second-hand purchases).

Businesses with turnover between $50 million and $500 million can claim an instant write off for secondhand assets purchased up to a value of $150,000. These assets must be purchased before the end of 2020.

So, businesses with turnover of up to $500 million can instantly write-off at least some second hand assets. Larger businesses can only instantly write off new assets.

This change is expected to assist business in at least two ways: firstly, it encourages businesses to buy new assets, which should make them more productive. Secondly, the change creates a larger market for those businesses that need to sell assets they already own.

Change to the Small Business Enterprise Threshold

The SBE threshold is currently $10 million in aggregate turnover. That is, only businesses with aggregate annual turnover of less than $10 million qualify as a small business enterprise. The threshold will rise over time to become $50 million.

Small Business Enterprises qualify for a range of tax concessions, including things like CGT relief on restructures (which can be quite handy as small businesses evolve over time). The full range of concessions can be viewed here.

JobMaker Hiring Credit

As we wrote last week, businesses can receive a credit of either $200 per week (for staff aged between 16 and 29) or $100 per week (for staff aged between 30 and 34) for newly hired staff. To be eligible, the newly hired staff must be employed for at least 20 hours a week. They must also be doing a demonstrably new job – this will be assessed by the business needing to show either that the number of employees employed within the business is higher than it was on September 30 or that the total payroll is greater than it was during the September 2020 quarter. (NB: the total headcount criterion has already raised eyebrows as something that could be reasonably easily manipulated, so these assessment criteria may be refined).

The credit is not available to businesses that are also claiming Jobkeeper. The new employee must have been receiving Jobseeker payments in at least one of the three months preceding their commencement with their new employer.

The new Jobmaker credit is similar to the Restart Wage Subsidy, which is paid to employers who take on a staff member aged over 50 and who has been on income support for at least six months. This benefit remains in place and, again, is obviously targeted at moving people over 50 off income support.

Apprentices and Trainees

The Commonwealth has extended the Supporting Apprentices and Trainees (SAT) wage subsidy. This subsidy pays 50% of an eligible apprentice or trainee’s wages, capped at no more than $7,000 per quarter.

There are various rules regarding starting dates. They are a bit too technical to try to describe here, so get in touch with us if you think your business might be eligible.

Assistance for the Redundancy Process

Sadly, some businesses will be forced to make some positions redundant. There has a been a small change to assist businesses who wish to help staff who are already or will be made redundant. Retraining and reskilling payments made by the employer will be exempt from Fringe benefits Tax (prior to now, if there was an insufficient connection to current employment, this training was taxed as a fringe benefit.