How the 2021–2022 Federal Budget Impacts Your Business

The 2021–2022 Federal Budget has been announced, and with it, a lot of confusion around how it will impact Aussie businesses and business owners. We've broken down some of the top announcements to help you find out more.

On Tuesday, 12 May 2021, the Australian Government announced the 2021–2022 Federal Budget. The budget was dubbed a ‘recovery plan’ to help Australians, businesses and industries get back on their feet and in a state of growth.

To make it easy to know what impacts your business, we’ve outlined the top 9 ways the 2021–2022 Federal Budget impacts your business. As always, this information is for general information only and we recommend speaking to your local business finance specialist to see if the below applies to you.

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Top 9 Ways the 2021–2022 Federal Budget Impacts Your Business

1. $16 billion of small-to-medium business tax cuts by 2023–24.

The Australian Government has announced small-to-medium businesses (SMBs) will receive more than $16 billion in tax cuts by 2023 to 2024. They’ve said this includes reducing the tax rate from 30% (from 2014–2015) down to 25% from 1 July 2021. 

With JobKeeper having ended on 28 March, 2021, the tax cuts are to help support businesses who are still returning to normal business activities. 

This is in addition to a further $7.8 billion of announced household tax cuts, which the government has said is done in hopes of increasing spending, in turn the demand for more jobs.

2. $20.7 billion extension to tax incentives.

An estimated $320 billion worth of business investments is said to be made following the extension of the Australian Government’s temporary loss carry-back and temporary full expensing tax incentives.

Through the extension of the temporary loss carry-back, “Eligible businesses who have previously had an income tax liability in a relevant year and have subsequently made taxable losses can claim a refundable tax offset up to the amount of their previous income tax liabilities.” 

The initiative was originally put in place during the peak of COVID-19 in Australia to interact with the JobMaker plan. However, the growth reported during the December quarter had the government investigate and put in place this extension.

Also extended under the $20.7 billion Federal Budget announcement was temporary full expensing. Eligible businesses can immediately deduct the business portion of the cost of eligible new depreciated assets (see Australian Government depreciation documentation).

3. 50% wage subsidy for new trainees and apprentices.

Another way the 2021–2022 Federal Budget will impact your business is if you plan to employ new apprentices or trainees.

The Australian Government is spending an additional $2.7 billion to extend the Boosting Apprenticeship Commencements program. It will see eligible businesses be paid a 50% wage subsidy over 12 months for newly commencing apprentices or trainees signed up by 31 March 2022. Subsidies will be capped at $7,000 per quarter per apprentice or trainee.

This program, expected to help more than 170,000 new apprentices and trainees, will help create more jobs as businesses receive help funding staff. 

More specifically, the Australian Government has also announced they will be releasing pathway services for 5,000 women to commence in non-traditional apprenticeships. They will also be adding 33,800 new training places through JobTrainer to help existing and new aged care workers to improve their qualifications. Registered nurses will also have access to additional training and financial support to help encourage them into aged care.

4. $84.8 million invested into improving rural internet speeds.

A $84.8 million extension of the Regional Connectivity Program will see improved broadband and telecommunications in more than 80 locations throughout regional Australia.

The program is designed to help give rural businesses access to faster internet and data connections, enabling them to provide more online and tele-services. Even before COVID-19, being able to have access to reliable internet and telecommunications was crucial to rural and regional businesses, so will be a welcome upgrade to those it impacts.

5. Easing of regulations when hiring and interacting with the government.

An estimated $430 million in annual compliance costs is expected to be saved with a $134.6 million expansion of the Government’s Deregulation Agenda. With this budget allocation, businesses will benefit by:

  • New technologies, which will facilitate the business’s compliance with modern awards.
  • Automatic manual recognition of occupational licensing for people working in multiple states.
  • The digitisation and streamlining of data being used or shared between the business and the government, saving them both time and money.
  • Greater flexibility for business communications through credit, superannuation and insurance laws, as well as neutral corporations.

6. Support and job creation in the residential construction sector.

The HomeBuilder, New Home Guarantee and First Home Super Saver Scheme programs are all expected to create greater demand in the residential construction sector, creating the opportunity for more jobs to be created.

HomeBuilder

In the Federal Budget, it was announced the government will be extending the commencement of construction under HomeBuilder to 18 months. This will reportedly help smooth out the construction pipeline, as well as support the creation of more construction jobs. 

HomeBuilder is expected to support more than $30 billion worth of residential construction projects throughout Australia. More than 120,000 applications have been received and has safeguarded more than one million jobs.

New Home Guarantee

The Australian Government has announced a further 10,000 New Home Guarantees in 2021–2022, on top of the successful First Home Loan Deposit Scheme.

From 1 July 2021 to 30 June 2022, more first home buyers will be able to build a new home or purchase a newly built home by only requiring a deposit as little as 5%. This will help more young Australians be able to enter the housing market, but also create more jobs for residential construction workers, as well as related real estate, finance, legal and similar fields.

First Home Super Saver Scheme

The First Home Super Saver Scheme has been expanded, allowing eligible first home buyers to release up to $50,000 in eligible superannuation contribution to boost their home deposit. 

Like the New Home Guarantee, the First Home Super Saver Scheme will allow more Australians to be able to afford their first home. In turn, this will create more jobs in respective construction, finance, legal and real estate industries.

7. $274.6 million to support tourism-related businesses.

If you’re in an industry that relies on international tourists, you may be positively impacted by the 2021–2022 Federal Budget. $274.6 million is being invested in the expansion and extension of successful programs under the Federal Budget to support Australian businesses who rely on international travelers. This includes travel agents, zoos, aquariums and event industries.

More than 800,000 half-price airfares are also being used to encourage more travel within Australia. 660,000+ tickets have already sold in popular travel destinations, including Cairns, Hobart, Adelaide and the Gold Coast.

8. $300 million arts and entertainment industry support.

Close to $300 million in support is being provided to the arts and entertainment industries to help related businesses. $125 million of this is going towards the Restart Investment to Sustain and Expand grants, which will kickstart new productions, festivals and events to hire musicians, artists and more through around 230 projects.

$20 million will also be going to supporting independent cinemas throughout Australia to help them continue to operate and keep people in jobs. The Australian Government will also be supporting the creation of ‘quality Australian local film and television content’.

9. More affordable child care to allow more people to work.

For businesses finding it hard to find people to fill roles will be benefitted by an investment of $9.7 billion in 2021–2022 to make child care more affordable. With reduced out-of-pocket child care expenses, more families can return to the workforce.

The initiative will also provide a further $1.7 billion to further reduce the cost of child care for more than 250,000 Australian families with multiple young children. By being able to return to the workforce with reduced costs will also hopefully increase spending, which is good for receiving businesses.

Disclaimer: This article is for general informational purposes only and does not replace professional advice or counsel. Neither Localsearch nor the author are liable for any misuse of information. Please speak to your business financial advisor for information specific to you.

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