The Federal Government have handed down its 2021-2022 budget. Below is a breakdown of what’s in store for small and medium business.
Coming off the back of the COVID-19 Pandemic, the Treasurer cited a need to maintain and focus on the nation’s economic recovery. A commitment to supporting jobs & essential services is of the utmost importance. Josh Frydenburg has said “The Covid-19 recession will see our deficit reach $161 billon this year, falling to $57 billion in 2024-25. With more Australians back at work, this year’s deficit is $52.7 billion lower than was expected just over six months ago in last year’s budget”.
The incentives rolled out in the federal budget specific to the SME community include tax cuts, business incentive expansions, technology boosters and more. We have expanded on the incentives available below.
Business incentive expansion
As part of the commitment to create jobs, the Treasurer announced the government will be extending temporary full expensing and temporary loss carry-back for an additional year. This means it will be available until 30 June 2023 instead of the initially proposed 30 June 2022.
The Treasurer said the government will deliver more than $16 billion in tax cuts to small and medium businesses by 2023–24, with around $1.5 billion flowing in 2019–20. This, he said, “includes reducing the tax rate for small and medium companies, from 30 per cent in 2014–15 to 25 per cent from 1 July 2021”.
Broadening AAT powers
The Administrative Appeals Tribunal (AAT) now has the ability to pause or modify ATO debt recovery actions while a small business is in a dispute. This will save significant legal costs for small business.
In line with its plans to make Australia a digital economy in the next decade, the government will invest $1.2 billion in its Digital Economy Strategy for three key reasons.
1. To build digital skills and capabilities.
2. To encourage business investment.
3. To transform government services.
Increasing AusBiz proposition
As the Treasurer announced, “Australia is an attractive place to do business”, with “our way of life, our safe, clean cities and our proximity to Asia” desirable to foreigners.
In a commitment to attract more business to Australia and create more Australian jobs, Mr Frydenberg flagged that the government has introduced a new Global Talent visa and Temporary Activity visa and “will modernise the framework for individual tax residency, to encourage highly skilled individuals to relocate to Australia”.
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