Federal Budget 2019: New tax breaks for small as instant asset write-off scheme is expanded

Almost a quarter of a million South Australian small businesses will now be eligible for the Federal Government’s instant asset write-off scheme, which has been increased and expanded to cover many more organisations.

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Almost a quarter of a million South Australian small businesses will now be eligible for the Federal Government’s instant asset write-off scheme, which has been increased and expanded to cover many more organisations.

After two years of trying, and failing, to deliver on tax cuts for all businesses, the Federal Government has instead focused firmly on small-to-medium enterprises in this Budget.

With SMEs generally considered to be the engine room of the South Australian economy, it’s good news for the local business sector.

Treasurer Josh Frydenberg lauded small-business owners, who “put their livelihoods on the line”, “start early and finish late” and “pay their workers first and take their own wages last’’.

In a bid to boost this sector of the economy, the Government pledged to bring forward a scheduled tax cut from 27.5 to 25 per cent for businesses with turnover of less than $50 million, pump another $60 million into Export Market Development Grants, and put in place new measures to ensure businesses are paid on time by government and other businesses.

The incentive for employers to take on an apprentice will also double to $8000.

The cornerstone of the package is the instant asset write-off scheme change, which will cost $700 million over the next two financial years — $200 million next year then half a billion in 2020-21.

The scheme allows a business to claim an immediate, full tax deduction for purchases, rather than depreciating an asset over time.

The scheme will be increased in value to cover assets worth up to $30,000, up from $25,000, and businesses with a turnover of up to $50 million will be eligible, up from a turnover figure of $10 million.

The write-off can be used every time an asset up to the threshold cost is bought, “Allowing a cafe to get a new fridge or grill, a plumber to buy new tools or a courier a new van’’, the Treasurer said.

“This will cover an additional 22,000 businesses, employing 1.7 million Australians.

“Already more than 350,000 businesses have taken up the instant asset write-off. And now, even more will have the chance to do so.”

This measure comes into effect immediately and will last until June 30 next year.

The company tax rate for businesses with an annual turnover of less than $50 million has already been lowered to 27.5 per cent, under changes announced in the 2016 Budget.

The scheduled further reduction in the tax rate for these businesses to 25 per cent will be brought forward by five years to 2021-22. This measure will benefit about 970,000 companies nationally.

The tax rate for businesses above this level is 30 per cent.

$525m to target skills shortages

Up to 80,000 apprenticeships will be created to stem skills shortages and ten training hubs established in regional areas of high youth unemployment as part of a $525 million future skills package.

Incentive payments for employers will be doubled to $8000 per apprenticeship placement and the apprentices also will get a $2000 “incentive payment”.

Areas of future high demand will be targeted, including communications technology, advanced manufacturing and health services.

Treasurer Josh Frydenberg said the package, of which $200 million over four years funds the 80,000 apprentices, was aimed at ensuring “all Australians of all ages have the skills they need for the jobs of today and the jobs of tomorrow”.

The ten new training hubs, sites for which are yet to be determined, will connect schools, industry and young people. These will be funded with $67.5 million over five years.

Another $62 million is allocated to boost literacy, numeracy and digital skills.

“Young Australians should have every chance of success when it comes to career opportunities in the digital age,” Mr Frydenberg said.

The skills package builds upon a $200 million South Australian scheme aimed at creating more vocational skills, particularly to capitalise on the $90 billion in naval shipbuilding projects centred on Adelaide.

Of this existing funding, $100 million is from a federal scheme, which is allocated a further $34.2 million next financial year.

A new scholarship program will be established for more than 1000 students a year to study in regional Australia.

First-time voter Gabriella Madigan Manuel, a 19-year-old university student from Edwardstown, urged “enough funding in schools, especially regional ones so they can attract teachers”.

— Paul Starick