The 2020 Federal Budget, delivered earlier this October, gave us a better understanding of what state the Australian economy might find itself in throughout the course of next year.
Jobs recovery, tax breaks, and an important expansion of the instant asset write-off program were the primary focus of one of the most stimulatory budgets Australia has ever witnessed.
Small business was the clear winner, particularly earthmoving businesses which are perfectly positioned to take full advantage of the instant asset write-off program.
Here are some key changes:
Game Changing Update to the Instant Tax Write-Off
With the aim of encouraging businesses investment, the Treasurer announced a significant change to the Instant Tax Write-Off.
Businesses will now be able to write-off the full value of any eligible asset purchased for their business.
The scheme will be available for small, medium and larger businesses with a turnover of up to $5 billion, until 30 June 2022.
Instant Tax Write-Off Applies to Second-Hand Equipment
Businesses with a turnover under $50 million can now claim an immediate tax deduction for second-hand assets purchased and installed between 7 October 2020 and 30 June 2022.
Businesses with a turnover of $50 million to $500 million can claim that same deduction for second-hand assets costing up to $150,000 if they are purchased by 31 December 2020 and installed ready for use by 30 June 2021.
Tax Relief for Business
Special measures have also been announced for Australian businesses who went from being profitable to making losses due to the impact of COVID-19.
Businesses with a turnover of up to $5 billion will be able to offset losses against previous profits on which tax has been paid.
Eligible business will receive a tax refund when they lodge their 2020-21 and 2021-22 tax returns, boosting cashflow for businesses who were previously profitable.
Measures in this Budget, together with what has been announced since the start of the COVID-19 crisis, will see $14 billion in new and accelerated infrastructure projects to support a further 40,000 jobs.
The infrastructure investment will fund major projects across each state.
JobMaker Hiring Credit
The Government announced a hiring credit called JobMaker to encourage businesses to hire younger Australians.
The JobMaker hiring credit will be payable for up to twelve months and immediately available to employers who hire those on JobSeeker aged between 16-35 years.
It will be paid at the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35 years.
New hires must work for at least 20 hours a week.
Excluding banks, all businesses are eligible.
Personal Income Tax Cuts
The personal income tax cuts will put more money in your employees back pocket at no additional cost to you.
If your business has delayed purchasing equipment, we believe now is the time to take full advantage of the Government’s supercharged Instant Tax Write-Off incentive.
For more information visit www.ato.gov.au or speak to your accountant or tax agent.
Gareth Powell is a Senior Manager at Moody Kiddell & Partners, asset finance and insurance specialists. Visit www.mkpgroup.com.au or call 1300 000 657.