Budget 2021: Tax breaks a boost for all Australian businesses
Almost every business in the nation will benefit from the $20.7bn tax-break package unveiled in this week’s budget.
Almost every business in the nation will benefit from the $20.7bn tax-break package unveiled in this week’s budget, along with support for pandemic-affected sectors, a government-backed loan scheme, and a new umpire to mediate between small businesses and the tax office.
Treasurer Josh Frydenberg wants to “unleash a further wave of investment’’ through the tax initiatives — the single biggest revenue concession in the budget — and keep the strong economic momentum going.
Business groups have broadly supported the measures, but the Australian Chamber of Commerce and Industry and Ai Group are calling for the government to open Australia’s borders sooner rather than later, to allow skilled workers to flow in, and to minimise further damage to sectors such as tourism and aviation.
The massive tax package announced by the Treasurer extends both temporary full expensing and temporary loss carry back provisions by a year.
The temporary full expensing measure, previously known as the instant asset write-off, now allows businesses with a turnover of up to $5bn to instantly write off the cost of any depreciable asset, and also to do this unlimited times.
The measure has been on the books for many years, but has never been made permanent, with the government increasing the asset value threshold in stages from $20,000 to $150,000 since 2019, and last year getting rid of this threshold altogether.
Mr Frydenberg said the measure applied to more than 99 per cent of businesses and had been extended until June 30, 2023, “so a tradie can buy a new ute, a farmer a new harvester and a manufacturer expand their production line’’.
This measure will cost the government $17.7bn out to 2024-25.
The temporary loss carry back provisions have also been extended, at a cost of $3.6bn.
This measure will allow eligible companies to carry-back tax losses from the 2022-23 financial year to offset previously taxed profits as far back as the 2018-19 income year.
The government will also continue the SME Recovery Loan Scheme, which provides a government guarantee for 80 per cent of secured or unsecured loans of up to $5m, for up to 10 years, with interest rates capped at 7.5 per cent.
Businesses with a turnover of up to $250m, which received JobKeeper payments in the first quarter of this year, or were in areas affected by the NSW floods, are eligible.
On the regulatory front, a new umpire to arbitrate in disputes over debt between businesses with a turnover of less than $10m and the Australian Taxation Office will be introduced.
“We will take these disputes out of the courts and let small business get on with what they do best,’’ Mr Frydenberg said.
The tax rules around employee share schemes will also be simplified, including removing cessation of employment as a taxing point, in a move which is expected to help the tech and start-up sector attract talent.
Pandemic-affected sectors were also targeted for support in the budget, with the arts sector to get $125m to kick-start productions, festivals and events, with about 230 projects to be supported, and $20m will go towards keeping independent cinemas open across the nation.
Independent education providers will receive $53.6m to fund grants of up to $150,000 to invest in infrastructure, expertise and new teaching solutions.
Industry-specific measures include the digital games tax offset, which provides a 30 per cent refundable offset for qualifying expenditure, and the excise refund scheme, which will give brewers and distillers full remission (up from 60 per cent) of any excise they pay up to a cap of $350,000 a year.
The government’s commitment to deregulation continues, with an extra $134.6m set aside in the budget to reduce the regulatory burden for businesses interacting with government via measures such as digitisation and new technology to navigate modern awards
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