As indicated in the latest budget data, the Australian economy has recovered faster and better than projected. Despite its minor shortcomings, JobKeeper successfully kept most companies viable and individuals employed. Below are the government measure extensions which continue to support businesses.
Temporary full expensing.
In order to support business investment and job creation, the government has decided to extend until 30 June 2022 the JobMaker Plan- temporary full expensing, a measure found in the 2020-2021 budget.
Eligible businesses with an aggregated annual turnover/total income of less than $5 billion will be allowed to deduct the entire cost of certain depreciable assets that were acquired from 7.30pm AEST on 6 October 2020. They must be already used or installed ready for use by 30th June 2022.
The alternative eligibility test based on total income remains the same and continues to be available to businesses. When we reach 1 July 2022, understand that normal depreciation arrangements will apply.
This is expected to decrease receipts $17.9 billion over the period, with $3.4 billion throughout the medium term.
Temporary loss carry-back.
Another way in which the government has chosen to strengthen Australia’s economic recovery following the Covid-19 induced recession is to extend the temporary loss carry-back initiative. This will support cash flow and this in turn will encourage business investment.
It allows all eligible businesses to utilize their tax losses from the 2022-2023 income year in order to offset any previously taxed profits. This can be done as far back as their 2018-2019 income year and is lodged in their 2022-2023 income tax return.
Eligible businesses with an aggregated annual turnover/total income of less than $5 billion will be allowed to take advantage of this loss carry back. The amount that is carried back should however not exceed any earlier taxed profits and it should not generate a franking account deficit. Those businesses that choose not to carry back their losses under this temporary loss carry-back initiative can still carry forward losses as normal.
This is expected to decrease receipts by $2.8 billion over the period with $1.9 billion net cost in the medium term.
Tax Cuts for low to middle income earners.
There is no longer a tax rise for low and middle income earners after the announcement of the Low and Middle Income Tax Offset (LMITO)
This one-off tax offset is worth $1080 for those individuals who are earning between $48,000 to $90,000 and is expected to cost the budget about $7.8 billion.
Although the controversial stage three tax cuts are not supposed to commence until 1st July 2024, the extension of the LMITO has squashed the speculations that it was going to be brought forward, unburdening businesses.
The stage three tax cuts are designed to provide all Australian workers earning between $45,000 – $200,000 the same 30% tax rate.
Providing more AAT powers to support small businesses.
The Administrative Appeal Tribunal (AAT) has recently been given the power to pause or modify ATO debt recovery actions when a small business is in a dispute. This is to make things easier, faster and more affordable for SMEs. It provides a chance for small businesses to not need to start repaying a disputed debt before the matter has been settled.
Technology boost to herald in a digitally advanced era.
As the government plans to support Australia in a move towards a digital economy in the next decade, a $1.2 billion investment has been placed in its Digital Economy Strategy. This is for these three key reasons:
- Enhancing digital skills and capabilities
- Stimulate business investment
- Transforming and updating government services
The Treasurer comments that by establishing a new National network that is digitally advanced and artificially intelligent, businesses will be compelled to follow suit. Through expansion of the government’s cyber security innovation fund, experts can be trained in the complex digital skills that will be required to support this bold move.
In addition to this, by introducing a patent box, the government is supporting ‘innovation and investment’ in Australian medical and biotech technologies. This works with the $2 billion investment announced in the 2020-2021 budget of the Research and Development Tax Incentive (R&DTI).
Increasing AusBiz propositions to attract talent and jobs.
The AusBiz initiative is designed to attract more business to Australia in order to create more jobs. It is common knowledge that Australia is a great place to do business with safe, clean cities, its close proximity to Asia and the well-known desirable way of life that many Australians enjoy.
By introducing a new Global Talent visa and a Temporary Activity visa, highly skilled individuals will be more tempted to bring their talent into Australia and support the opportunity for growth in this country.