What the 2020-21 budget means for your business

Brent Wedesweiler

Thursday, 08 October 2020

The 2020-21 budget was unveiled on October 6 by treasurer Josh Frydenberg, and it includes a range of support measures for Aussie businesses still recovering from the COVID-19 crisis.

Some of the measures announced are completely new, and others have simply been extended. By encouraging Australians to spend, they’re designed to support Aussie businesses and revive the economy.

Here’s what the recent budget reveal means for your business.

Save on business assets with an extended Instant Asset Write Off

The instant asset write off (IAWO) allows business owners to buy and instantly depreciate assets, reducing their tax burden. In response to COVID-19, the instant asset write off was extended, encouraging SMEs to invest in business equipment while boosting our economy.

Previously, the measure was only available to small and medium-sized businesses with an annual turnover of less than $500 million.

Now called ‘temporary full expensing’, the IAWO has become more inclusive, and businesses who turnover less than $5 billion will have the opportunity to deduct the full cost of eligible assets purchased after budget night, provided they’re used or installed by 30 June 2022.

SMEs will be able to apply this measure to second-hand assets as well.

Eligible companies to receive a tax refund

Previously, businesses were able to carry forward their losses to reduce future tax payments. Now, the Government is letting businesses carry back losses from the 2019-20, 2020-21 or 2021-2022 income years to offset previously taxed profits.

Frydenberg says that “businesses shouldn’t have to wait for the tax system to catch up”. This new measure means that eligible businesses who were profitable prior to the pandemic but are now making a loss can claim back some of the taxes they paid.

The measure will be available to one million businesses (equating to roughly 8.8 million Australians).

Non-assessable and non-exempt grants for Victorian businesses

The Government offered business grants to Victorian companies hit hard by the second wave of Coronavirus. These grants will now be non-assessable and non-exempt, meaning they will not be taxed.

Given what Victoria has been through, the Government believes the extension to this support measure will help businesses within the state recover.

Companies encouraged to hire up with new JobMaker scheme

Australian businesses have had to make difficult decisions over the past six months, letting staff go and cutting salaries to survive. The unemployment rate reached 7.5% in August, but for the economy to pick back up employers need to start rebuilding their teams.

This new measure applies to younger employees only, aged between 16-35. Eligible companies will receive $200 a week for every new employee they hire aged between 16-29, or $100 per week for new hires aged between 30-35.

Payments will be given to each eligible hire for up to a year (totalling up to $10,400 per new position created). The measure has been introduced to encourage hiring and reduce the unemployment rate.

For more information on the above measures and your eligibility, visit the Government’s Budget Overview.

Brent is the Director of Operations at Valiant, bringing a wealth of knowledge from 18 years of experience in the finance industry. He’s worked with banks and fin-techs in the consumer & commercial space, where he discovered his passion for helping SMEs.

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