Small to medium businesses are big winners in the 2021 budget which announced the following initiatives aimed at rebuilding the economy and further reducing unemployment:
Temporary Full Expensing
The temporary investment tax incentive announced in last year’s budget has been extended for a further 12 months until 30 June 2023. Businesses with a turnover up to $5 billion will be able to deduct the full cost of any eligible asset they purchase for their business, including the cost of improvements to existing assets, until 30 June 2023.
Removal of current exclusion that applies to deductions for the first $250 spent on education courses, which will give more business owners (and their employees) a reason to learn new skills
Temporary Loss Carry-Back Provision
Companies can carry back tax losses for an extra 12 months from the 2019-20, 2020-21, 2021-22 and now 2022-23 income years to offset previously taxed profits in 2018-19 or later income years.
Extension of Loan Scheme For Small Businesses
The SME Recovery Loan Scheme, which builds on the SME Guarantee scheme, will be extended with an increased government guarantee of 80%, a higher maximum loan size of $5 million and maximum loan term of 10 years with interest rates capped at around 7.5%. Borrowers may also be offered repayment holidays of up to 24 months on appropriate products. The Scheme is available to SMEs with a turnover of up to $250 million that were recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021 or were affected by the floods in eligible Local Government Areas in March 2021.
The corporate tax rate for SMEs will drop to 25% from 1 July 2021 from 27.5%.
Digital Economy Strategy
$1.2 billion will be provided over six years from 2021-22 for the Digital Economy Strategy. For SMEs, $53.8 million over four years from 2021-22 to create a National AI Centre and four AI and Digital Capability Centres to drive and support SMEs to adopt and use transformative artificial intelligence technologies; $15.3 million over three years from 2021-22 to promote and accelerate the adoption of e-invoicing by businesses and across all levels of Government; $12.7 million in 2021-22 to expand the Australian Small Business Advisory Service Digital Solutions program reach to up to 17,000 small businesses.
An investment of $134.6 million over four years from 2021-22 will progress the Government’s deregulation agenda to make it easier for businesses to employ people and reduce the regulatory burden of interacting with the government.
The Government will allow businesses to self-assess the economic life of certain intangible assets (such as patents) for tax depreciation purposes to encourage investment and hiring in innovative activity.
Government is broadening the scope of the Administrative Appeals Tribunal to help SME’s put a pause on any debt recovery action launched by ATO until the underlying dispute is resolved. More funding also made available the Australian Small Business and Family Enterprise Ombudsman to continue helping small businesses resolve disputes.
Removal of current exclusion that applies to deductions for the first $250 spent on education courses, which will give more business owners (and their employees) a reason to learn new skills.
Almost $130 million to encourage entrepreneurship through the New Enterprise Incentive Scheme (NEIS) and Entrepreneurship Facilitators Program support people who want to start, run and grow their own business.