The 2021-22 Federal budget had a focus on jobs and clear support for business and sectors doing it tough.

What the budget delivered

Incentives for Businesses to invest and create jobs

The temporary investment tax incentive announced in last year’s budget has been extended for an additional year 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.

Temporary loss carry-back provision

Similarly, companies will now be permitted to 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.

Tax cuts

The corporate tax rate for SME’s will drop to 25 per cent from 1 July 2021 from 27.5 per cent.

Extension of loan scheme for small business

The government is extending the SME Recovery Loan Scheme which builds on the SME Guarantee scheme. It includes an increased government guarantee of 80 per cent, a higher maximum loan size of $5 million and maximum loan term of 10 years with interest rates capped at around 7.5 per cent. 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.

Digital economy strategy

Small businesses are being supported to adopt digital technologies through a $12.7 million expansion of the Digital Solutions – Australian Small Business Advisory Service. A further $15.3 million will be used to drive business uptake of e-invoicing, which can deliver up to $28.2 billion in net benefits over 10 years.

Stimulating Innovation

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.

Supporting Apprenticeships

The Government is spending an additional $2.7 billion to extend the Boosting Apprenticeship Commencements program. The demand-driven program is expected to support more than 170,000 new apprentices and trainees by paying businesses a 50 per cent wage subsidy over 12 months for newly commencing apprentices or trainees signed up by 31 March 2022. The subsidy will be capped at $7,000 per quarter per apprentice or trainee.

Deregulation

$134.6 million over four years from 2021-22 to 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.

Other measures

• 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.
• New efforts to give SMEs a bigger slice of the procurement pie. Government will provide $2.6 million over four years from 2021-22 to support and strengthen participation in Commonwealth procurement. Funding includes: scans of procurements to map any common ‘pain points’ for SMEs; increased communication of procurement opportunities to potential suppliers; targeted Government Procurement Learning Events for SMEs about how to access supply chains and work in major project environments; and a pilot of direct engagement of SMEs by the Department of Industry, Science, Energy and Resources for contracts up to $200,000.
• 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.

More information on the budget can be found here.