The 2020 Budget delivers tax cuts and job creation incentives

The 2020 Budget is set to create jobs and rebuild Australia’s economy, says Treasurer Josh Frydenberg.

“Under our plan, the economy is forecast to grow by 4¼ per cent next calendar year and unemployment is expected to fall to 6½ per cent by the June quarter 2022,” Frydenberg said in a statement.

In addition to tax cuts for an estimated 11 million Aussies, the Budget delivers job creation incentives for business.

Fiscal stimulus in the 2020 Budget

The $4 billion JobMaker Hiring Credit is available from today for new employees aged 16-35. This can be paid for up to 12 months for each new hire.

The Hiring Credit will be paid quarterly in arrears at the rate of $200 per week for those aged between 16-29, and $100 per week for those aged between 30-35. Eligible employees are required to work a minimum of 20 hours per week.

Existing support for apprenticeships will be boosted with $1.2 billion to create 100,000 new apprenticeships and traineeships, and their employers will benefit from a 50 per cent wage subsidy.

Most businesses (99%) will now be able to immediately write-off the full cost of eligible depreciable assets for a limited period. Small, medium and larger businesses with a turnover of up to $5 billion will be eligible.

The Government will also allow companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid to generate a refund. 

The Government is also providing $105 million in tax relief to expand access to a range of small business tax concessions by lifting the aggregated annual turnover threshold for these concessions.

Businesses with an aggregated annual turnover between $10 million and $50 million will be able to access up to 10 small business tax concessions.

The expanded concessions will apply in three phases, with the first phase starting from 1 July 2020. The changes will reduce red tape and support around 20,000 businesses to attract workers and retain jobs.

Government is also cutting red tape around fringe benefit tax and will exempt employer-provided retraining activities from FBT to encourage businesses to retrain and redeploy their workers to new roles within the business.

What industry says about the 2020 Budget

Mary Aldred, CEO, FCA

The Franchise Council of Australia has welcomed the targeted assistance for small business in the Federal Budget.

“Small business has been the hardest hit sector through Covid-19, and will be the most important driver of employment and economic activity on the road to recovery,” said Franchise Council of Australia CEO Mary Aldred.

“It’s absolutely critical there is a path forward for young Australians, and the wage subsidy for apprentices and trainees hits the mark,” said Aldred.

“The cash flow payments for SMEs will assist the thousands of mum and dad small business owners who are currently struggling to keep their head above water. This will help see them through to the recovery stage, along with the credit and loans support announced.

“Access to finance is always a major challenge for small business, particularly through Covid-19, and the SME loan guarantee scheme provides a bridge to survival.

“This Federal Budget puts small business survival and sustainability at the heart of the Government’s mission to restore the economy, because Australia is depending on sole traders, retailers and the broader small business sector to see this pandemic through to the other side,” said Aldred.

Trent Innes, MD, Xero Australia and Asia

“There were several announcements to encourage small businesses to invest and hire. The two that immediately stood out were the extension of the Instant Asset Write Off policy to June 2022, with no cap on the cost of assets, and the JobMaker Hiring Credit of up to $200/week for businesses which hire from tomorrow, 16-35 year olds to work at least 20 hours per week who were previously on JobSeeker.  

“Digital solutions will play an important role in implementing many of the policies in this Budget. It was great to see the recent announcements to help small businesses shift to digital solutions such as the Jobmaker Digital Business Plan and the Cyber Security Plan. Any measures to give business owners better access to technology will increase capacity and help them to take advantage of the many other business-related announcements.”

Kate Carnell, ASBFEO

The Australian Small Business and Family Enterprise Ombudsman has welcomed the Federal Government’s $4.26 million budget commitment to rolling out a new mental health program for small business owners.

Leading mental health organisation Beyond Blue will deliver the NewAccess for Small Business service, which will provide small business owners with access to free one-on-one telehealth sessions with specially trained mental health coaches. The service is expected to commence early next year.

“Mental health is proving to be the next big challenge to emerge from the COVID crisis and it is particularly impacting the small business community,” Carnell said.