Federal Budget 2020: Tax cuts for businesses aimed at getting economy going again
Tax cuts coupled with an expansion to the instant asset write-off scheme will create thousands of jobs and set off a “wave of investment” to put thousands of private businesses at the coalface of Australia’s economic recovery.
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Tax cuts coupled with an expansion to the instant asset write-off scheme will create thousands of jobs and set off a “wave of investment” for businesses across the country, the Treasurer has declared.
A suite of tax reforms and investment sweeteners contained in this year’s Federal Budget is designed to put businesses at the coalface of Australia’s economic recovery.
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Treasurer Josh Frydenberg is pinning the nation’s hopes on the private sector, which employs 80 per cent of Australians, to employ workers and pull the nation out of recession.
The Federal Government has announced it will expand the popular Instant Asset Write-Off scheme as part of the “largest set of investment incentives” in history.
Companies with a turnover of up to $5bn will be able to write off the full value of eligible assets they purchase until June 2022.
About 3.5m businesses are expected to write-off assets worth up to $150,000 under the plan which is expected to deliver $26.7bn in tax relief over the forward estimates.
In a major change to tax reform, about one million companies will be able to use losses incurred to June 2022 to offset against prior profits made in or after the 2018-19 financial year.
The instant asset write-off scheme will provide “crucial” relief for restaurant owner Tuan Nguyen in a “disastrous year”, the Gailes resident said.
“Every cent will count towards the rough year that we’ve all had as small business owners,” he said.
Mr Nguyen owned his restaurant Ngon for under 12 months before COVID hit and triggered a “rollercoaster” of restrictions and venue limits.
Mr Nguyen said his family had already spent “a substantial amount of money” preparing the business for opening.
COVID had limited his ability to continue those upgrades and recoup his investment.
“In the first two weeks we were down 90 per cent, then 70 per cent,” he said.
“And being a new business, we didn’t have the savings you would have if you’d been opened many years.”
Mr Frydenberg tipped the tax incentives would “unleash a wave of investment across the country”.
Australia’s unemployment rate is expected to peak at 8 per cent in the December quarter as the economy falls by 3.75 per cent.
In 2021 the economy is forecast to grow 4.25 per cent as the unemployment rate falls to 6.5 per cent in June 2022.
The Treasurer said the tax and investment reforms would kickstart the nation’s private sector and create 50,000 new jobs.
“Through no fault of their own, millions of small and medium-sized businesses have faced lockdowns and restrictions that have severely impacted their ability to trade,” he said.
“COVID-19 has turned fundamentally sound businesses into loss-making businesses.”
In a major change to fringe benefits tax, companies will be allowed to rely on existing corporate records when finalising annual returns.
They will also be exempt from the 47 per cent tax payable for retraining provided to redundant, or soon to be redundant employees.
The government will also expand access to ten tax concessions and cut red tape for about 20,000 businesses by increasing the small business turnover threshold from $10m to $50m.
About $800m will be invested by the government over four years to help Australia become “a leading digital economy” by 2030.
The government says income and jobs growth and improved productivity will be created by an investment in modern digital infrastructure including 5G and the National Broadband Network.
