Business may already be a core constituency for the Government, but it has not been completely forgotten in a pre-election Budget mainly focused on households.
- Small business tax cuts have been brought forward by five years, taking their tax rate from 27.5 per cent down to 25 per cent
- The instant write-off has been extended to cover assets up to $30,000 for businesses with turnovers less than $50 million
- There is support for up to 80,000 new apprenticeships over the next five years
This year’s Budget extends existing tax relief for small and medium businesses.
After dropping its politically unpopular big business tax cuts, the Government has focused on the smaller end of town, bringing forward tax cuts and expanding the instant asset write-off.
In his speech, Treasurer Josh Frydenberg lauded small businesses as “the engine-room of our economy”, acknowledging business owners who “put their livelihoods on the line”.
Tax cuts brought forward
Tax cuts for small and medium businesses will be brought forward and will include businesses with turnovers below $50 million.
What Budget 2019 means for you:
The tax rate will drop from 27.5 per cent in the 2019-20 financial year to 25 per cent in 2021-22 — five years earlier than planned.
The Government says the move will benefit about 970,000 companies employing about 5.2 million workers.
“The tax measures that have been announced in the Budget are positive for the economy, they’re particularly positive for business,” said Innes Willox from the Australian Industry Group.
Instant asset write-off raised to $30,000
Businesses turning over as much as $10 million can already deduct certain assets worth up to $25,000 from their tax bills, rather than claiming the depreciation over a number of years.
The Budget extends the instant write-off to cover assets up to $30,000, for businesses with turnovers less than $50 million — “allowing a cafe to get a new fridge or grill, a plumber to buy new tools or a courier a new van”, the Treasurer said.
It is the second increase in a matter of months, with the write-off already increased from $20,000 to $25,000 in January.
The Government says more than 350,000 companies have used the existing write-off and it expects about 22,000 additional businesses to now be eligible.
The Council of Small Business told the ABC it was pleased and surprised by the measures, particularly the extension to cover businesses with larger turnovers.
“They’re still small businesses,” said the Council’s chief executive Peter Strong.
“There’s people who might own three service stations that are turning over a lot more than $10 million, because of the low margins that you have in service stations, but they haven’t been able to use any of these support mechanisms, so it’s good to see that happen.”
The expanded write-off is in effect from now until 30 June next year.
Extra incentives for apprenticeships
The current incentive payments for apprenticeships will be doubled, for fields from carpentry and plumbing to hairdressing and baking.
Employers will receive $4,000: $2,000 after the first 12 months of an apprenticeship and $2,000 at its completion. That’s on top of an existing $4,000 employer incentive.
There is also a total payment of $2,000 for the apprentices themselves — $1,000 after 12 months and $1,000 at the end of their apprenticeship.
The Government says the measures will support up to 80,000 new apprenticeships over five years and the list of eligible occupations will be reviewed annually to reflect skills shortages.
The Budget also proposes 10 “training hubs” across Australia at a cost of $50.6 million over four years, focusing on training in industries that have a local skills shortage and designed to target youth unemployment in regional areas.