Federal Treasurer Josh Frydenberg described the private sector as the ‘engine of the Australian economy’ and pledged to give businesses a ‘kick start’ through the measures outlined in his latest Budget.
Frydenberg says the nation’s economy has been hit hard by the global pandemic, with the largest fall in GDP on record in the June quarter.
He announced a host of measures to incentivise businesses to invest and take on staff, but how to these translate on a practical level?
Instant asset write-off scheme
The Government’s expansion of its instant asset write-off program means businesses with a turnover of up to $5 billion can deduct the full cost of equipment they purchase for their business.
This applies to purchases made between October 6 2020 and June 30 2022 of any value. The limit has already been raised twice this year up to $150,000 from $30,000 in March.
“Over 99 per cent of businesses will be able to write off the full value of any eligible asset they purchase for their business,” Frydenberg said in his Budget speech.
“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a food manufacturing business will be able to expand its production line.”
The scheme also applies to second-hand assets.
Businesses that are operating under a loss will be able to deduct their losses against prior profits, in a major change to how businesses can claim deductions.
Under the changes, businesses can carry losses from 2019-20, 2020-21 and 2021-22 against tax paid in 2018-19, 2019-20 or 2020-21 income years.
“Normally, businesses would have to return to profit before they can use these losses, but these are not normal times,” Frydenberg explained in his speech.
“In order to keep their workers, these businesses need our help now. They cannot wait years for the tax system to catch up.”
JobMaker hiring credits
Businesses who employ young workers can claim up to $200 a week under the Federal Government’s new JobMaker program.
The $4 billion program applies to businesses who create a new position and fill it with a person aged 16 to 35, within the next 12 months.
“All businesses, other than the major banks, will be eligible. Treasury estimates that this will support around 450,000 jobs for young people,” the Treasurer remarked.
The Budget measure is targeted at employers whose young workers received JobKeeper during COVID-19.