The Federal Government’s 2021 Budget extends some of last year’s temporary measures intended to provide relief to Australian businesses and facilitate opportunities to stabilise and continue to trade profitably. Some provisions target industry sectors and small to medium sized businesses specifically. Here’s a short summary of the key takeaways.
Tax benefits for businesses
- For businesses with a turnover of less than $5 billion per annum last year’s temporary investment tax incentive enabling them to deduct the full cost of any business asset purchased has been extended until 30 June 2023. This deduction also applies to improvements to existing assets.
- Eligible businesses will also be able to use tax losses from the 2022‒23 income year to offset previously taxed profits as far back as the 2018‒19 income year when they lodge their 2022‒23 tax return.
- The corporate tax rate for SMEs (employing up to 199 people) will drop from 27.5% to 25% from 1 July 2021.
- Businesses will be allowed to self-assess the economic life of some intangible assets for tax depreciation.
- Small businesses will be able to ask the Administrative Appeals Tribunal to act as an independent umpire to stop the Tax Office from pursuing them for disputed debts until the issue has been resolved.
- A concessional tax rate of 17% on business profits from Australian medical and biotechnology patents will apply from 1 July 2022.
Government loans for qualifying SMEs
For SMEs with turnover of up to $250 million pa that received JobKeeper payment between 4 January 2021 and 28 March 2021, or were affected by flooding in eligible Local Government Areas in March 2021, the SME Recovery Loan Scheme is being extended and the terms amended to provide
- an increased government guarantee of 80%
- maximum loans of up to $5 million
- maximum loan term of 10 years
- interest rates capped at less than 8%.
Borrowers may also be eligible for repayment holidays of up to 24 months.
New incentives for some sectors
Training and education ‒ To encourage business owners and their employees to learn new skills the current exclusion applying to deductions for the first $250 spent on education courses has been removed.
To encourage apprenticeship employment $1.5 billion has been allocated to be paid to businesses taking on new apprentices and trainees for 12 months from commencement.
Digital economy strategy ‒ $1.2 billion over six years allocated to a Digital Economy Strategy to encourage the uptake and use of artificial intelligence by SMEs, adoption of e-invoicing by businesses and across all levels of government, and expansion of the Australian Small Business Advisory Service Digital Solutions program reach to up to 17,000 small businesses.
Micro and SME development ‒ The New Enterprise Incentive Scheme (NEIS) and Entrepreneurship Facilitators Program (EFP) will receive nearly $130 million in funding support those who want to start, run or grow their own business.
SME procurement opportunities ‒ $2.6 million over four years from 2021‒22 to fund SME access to information, training and identification of barriers to participation in Commonwealth procurement.
Social services and care ‒ an estimated additional $17.7 billion for aged care, $13.2 billion for the National Disability Insurance Scheme (NDIS).
National infrastructure ‒ $15 billion principally for transport network upgrades.
Small craft breweries and distilleries ‒ cap for claims on the Excise Refund Scheme increased from $100,000 to $350,000.
Dispute resolution ‒ The Australian Small Business and Family Enterprise Ombudsman has received additional funding to help small businesses resolve disputes.
Regulatory concessions ‒The budget also allocated $134.6 million over four years towards enabling businesses to employ staff and reduce the burden of fulfilling compliance with government regulations.
The information cited in this blog is sourced from government and media websites, and in no way reflects the opinions of Gallagher Australia.
Could these provisions impact your risk and insurance plans?
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