Small and medium sized businesses play a crucial role in boosting the economy of the country. The Australian government realises this and has announced many incentives for business owners in the federal budget 2020-21. These incentives are a way for the government to help small businesses to recover from the negative impacts of Covid19 pandemic.
Instant asset write off
The scheme of instant asset write off has been extended. It allows any Australian business with an annual turnover of up to $5 billion to write off purchases of assets that are eligible. There is no cost limit on the purchases of such eligible assets. It means the cost of the purchased asset can be deducted from profits in the year of their purchase. The extension of this scheme will remain in force from 6th October 2020 to 30 June 2022.
Instant asset write-off will be applicable on the purchase of second-hand assets for businesses having an annual turnover of less than $50 million.
- The annual turnover of your business must be within the limits specified under the scheme
- The asset must be purchased in the same year in which its cost has been deducted in the accounts
- The cost of the purchased asset should be less than the threshold value
JobMaker hiring credit
JobMaker is an ambitious $74 billion plan announced by the government in the federal budget 2020-21. It is aimed at boosting the economy hit badly by Covid-19 pandemic and to bring large numbers of Australians back to work. JobMaker hiring credit is a program that is a part of the larger JobMaker initiative and it will be administered by Australian Taxation Office.
Starting from 7th October 2020, employers giving jobs to new employees will be eligible to get access to their JobMaker Hiring Credit for a period of next 12 months. Claims for these credits can be made on a quarterly basis with first claims to be made in February 2021. The hiring credit will be $200 per week for hiring an eligible employee between the ages of 16 and 29. It will be $100 per week for hiring an eligible employee between the age of 30 and 35.
- The business must have ABN
- It must be registered under PAYG
- It must be reporting under single touch payroll
Loss carry-back provisions
Loss carry back provisions in the new budget are designed to provide businesses cash flow support. Businesses that were earlier paying tax but find themselves in a position of loss because of Covid-19 will benefit greatly with this initiative. Under this scheme, businesses that paid tax in previous years but suffered heavy losses this year because of Coronavirus restrictions can now make a claim for the refund of such tax. The annual turnover of the business should be less than $5 billion to be eligible for tax refund under this scheme.