On Tuesday, 6 October 2020, the Australian Government announced the 2020 budget. NAB Group Economics reports this is one of the most stimulus-heavy budgets ever seen, with emphasis on job and business recovery.
However, with the Australian Government’s press conference last week for the ‘Go Digital’ initiative, there is a lot of information circulating. We’ve taken some of the key takeaways from the budget, as well as the Go Digital press conference to help you learn the basic details of what’s to come.
Remember, the below information is only general information and does not consider individual circumstances. You are best speaking with your financial professional for guidance relevant to your business specifically.
Key Takeaways From the 2020 Australian Budget for Businesses
Businesses with less than $5 billion turnover will be able to deduct eligible assets until 30 June 2022.
99% of Australian businesses may be eligible to deduct the full expense of capital assets used or installed before 30 June 2022. The Australian Treasurer, Josh Frydenberg, said the purpose of the deductions is to help encourage businesses to invest and unlock investment.
The deductions are in addition to the instant asset write-offs introduced during COVID-19, which has been extended until 30 June 2021.
The Australian Government will be investing an additional $1.2 billion into wage subsidies to help Australian businesses take on 100,000 new apprentices and trainees. A new wage subsidy program is launching from 5 October 2020, allowing businesses of any size to subsidise 50% of apprentice and trainee wages, up to $7,000 per quarter until 30 September, 2021.
However, businesses will want to jump onto the subsidy if they’re hiring new apprentices and trainees. Subsidies are capped at 100,000 apprentices and/or trainees.
Loss carry back allowing businesses to offset current losses on previous tax refunds.
In an attempt to help struggling Australian small businesses, the Australian Government has introduced the ‘loss carry back’ for businesses with a turnover of up to $5 billion. This means those businesses which have made a loss over the COVID-19 period will be able to claim back some of their previously paid tax.
This will apply to losses incurred up until June 2022 and be subsidised by tax paid in the 2018/19 tax year.
$1.2 billion to boost employment in young people with businesses being able to access a wage subsidy.
The Australian government has pledged $1.2 billion to help get young people back to work. Currently, Australia’s unemployment rate sits at 6.8%, with the majority being younger people. In an attempt to combat this, the Young People Wage Subsidy has been introduced, starting from the 7 October 2020. Businesses will be able claim $200 per week for new employees aged 16 – 29 and $100 for those aged 30 – 35.
However, there is a catch. In order to be eligible for the subsidy the new employee must have been receiving either JobSeeker, Youth Allowance or Parenting Payments for at least one of the last three months and work at least 20 hours per week. The role itself must be new and businesses may need to provide evidence of this in the form of payroll bills and head counts.
Increased Eligibility for Small Business Tax Concessions
The 2020 budget also came with changes to fringe benefit taxes, increasing the threshold allowing more businesses to access over 10 tax concessions. Businesses with an aggregated turnover of $50 million or less are now eligible. This includes immediate deductions for start-up expenses and essential employee equipment such as phones, laptops and parking.
Small Business Tax Concessions Now Available for Business with a Turnover of up to $50 Million:
- Immediate deduction for certain start-up expenses.
- Immediate deduction for certain prepaid expenses.
- Fringe benefits tax (FBT): Small business car parking exemptions.
- FBT: Multiple work related portable electronic devices exemption.
- Simplified trading stock rules.
- PAYG instalments based on GDP- adjusted notional tax.
- Small business excise concession.
- Small business excise-equivalent customs duty concession.
- Two-year amendment period.
- Simplified account methods.
About the Australian Government’s Go Digital Initiative
On Tuesday, 29 September 2020, the Australian Government announced they will be investing $800 million into helping future-proof and digitise businesses. Much of the $800 million budget will be allocated to bringing business’s government services online, including digital identity systems to streamline their accounts.
$22.2 million to expand the Digital Advisory Service for small-to-medium-sized businesses.
The Australian Government is investing $22.2 million to help small businesses take advantage of digital technologies. This will be done through expansion of the Australian Small Business Advisory Service — Digital Solutions Program, a Digital Readiness Assessment Tool and Digital Directors Training Package.
Currently, small businesses with fewer than 20 full-time or equivalent employees, as well as sole traders are eligible for support via the Australian Small Business Advisory (ASBAS) Digital Solutions. The services can help provide support and subsidisation for websites and online selling, social media and digital marketing, online security and data privacy, using small business software and more.
It’s unclear if the eligibility to access the ASBAS will expand with the additional funding.
$2.5 million to provide access to digital skills training for workers and small-and-medium-sized businesses.
Small-to-medium-sized businesses will soon have access to an industry-led Digital Skills Finder program. This will allow eligible businesses to have quick access to the skills and knowledge they need to take their businesses to the next level.
The aim of this stimulus is to increase the digital literacy of current small businesses in Australia, preparing them and their business for the digital world ahead.
$256.6 million to create a digital identity system.
The Australian Government has allocated $256.6 million to expanding the digital identity system for Australians. This will enable Australians to access their government services, such as mygov and the ATO, through up-to-date technology just as facial recognition. These processes will simplify service and reduce costs surrounding government interaction.
$419.9 million to modernise Business Registers and Director Identification Numbers.
Through the Modernising Business Registers (MBR) Program, the Australian Business Register and 31 registered administered by the Australian Securities & Investments Commissions (ASIC) will all be unified online. This includes grouping the registers for companies, business names, Australian Business Numbers (ABNS) and more.
The program will make it easier and more efficient for new businesses on startup, as well as on-going for both new and existing businesses.
$3.6 million to assist in the adoption of electronic invoicing for all Federal Government agencies.
The Budget 2020 saw the Australian Government pledge $3.6 million toward the adoption of electronic invoicing for all Federal Government agencies by 1 July 2022. In short, this will streamline the invoicing process between government agencies and businesses across Australia.
Disclaimer: The information in this article is for general information only and does not replace individualised advice from a finance professional. Localsearch, nor the author, are not liable for any misuse of any information in this article.
Feature image credit: Photo by Michael on Unsplash