I’m here with insights on the Federal Budget 2021-22 for Australian businesses on 14 May 2021.
This week, the federal budget was handed down. In this brief, I’ll highlight key aspects of the budget that relate to your business and what it means for you:
- Instant Asset Write Off
- Building Infrastructure
- Financial Support for Small Business
1. Instant Asset Write Off
In an announcement that will please many Tenfold clients and Australian businesses, the instant asset write off has been extended for a further year.
- Businesses with total income of less than $5 billion will be able to deduct the full cost of capital assets purchased from 7 October 2020 (last year) and first used or installed by 30 June 2023.
- The extension also enables businesses to fully expense the cost of improvements to existing eligible assets in the first year of use.
- There is no cap on the amount your business can claim for instant write off during this extended period (however, it is due to be capped at $1000 from 1 July 2023)
- Small and medium businesses (turnover under $50 million) will also be able to apply “full expensing” to second-hand assets.
- (For an example of how the Instant Asset Write Off works for business, please contact Tenfold for our one-page summary.)
Tenfold’s perspective on Instant Asset Write Off for business:
Many Tenfold business coaching clients took advantage of the Instant Asset Write Off over the last 12 months to purchase vehicles, machinery or complete office fit outs. This has been great to replace existing assets, but as you grow your business and you require new assets to take your business to the next level, this extension of the program will provide the benefit right up to 30/6/2023.
Using the chargeable rate calculator we use with the businesses we coach, many of you have seen the significant profits you can make by employing good apprentices and making use of this scheme.
- There has been another extension to an existing subsidy: As before, businesses that hire a new or recommencing apprentice or trainee will qualify for 50% wage subsidy for up to 12 months from the employment start date.
- The subsidy will be to the value of $7,000 per quarter for each apprentice/trainee you hire and has been extended to out to 31 March 2022 (next year).
- In addition to extending the commencement period, the scheme has been opened up to businesses of any size, with no limit on the number of new apprentices/trainees.
- To encourage and support more women to take on non-traditional trade occupations (particularly roles on the tools in the construction sector), a gateway service will be available. The service will provide additional support and advice for both employers and apprentices.
- Training will be further supported by way of $149.2 million to be invested in 15 industry owned skills enterprises over four years. This collaboration will invest in training that delivers outcomes to strengthen Australia’s skills base.
Tenfold’s perspective on training:
Consider roles for apprentices and trainees in growing your business. Tenfold coaches will be discussing the use of trainees with clients where we feel it may be appropriate.
3. Building Infrastructure
The federal government continues to back infrastructure in this year’s budget, with an additional $15.2 billion to be invested in projects. We’ve written about this in previous client briefings – see: Why You Should Be Very Confident to Grow Your Business in 2021-2024
This is further to last year’s budget investment allocation of $19 billion, and part of the government’s commitment to provide $110 billion in infrastructure spending over the next 10 years.
Again, social housing will be indirectly supported through $124.7 million in funding provided to states and territories to add to public housing stocks and to meet wage costs for workers in social and community services roles.
4. Financial Support for Small Businesses
- Small businesses (with turnover of less than $10 million) with tax debts will have an easier, faster, and cheaper way to pause the ATO debt recovery actions until their case is decided by the Administrative Appeals Tribunal (AAT).
- Businesses with cash flow challenges will also get a bit more breathing room, as the threshold for issuing statutory demands will increase from $2,000 to $4,000. This will assist businesses from being pushed into liquidation over small debts.
For more information about any of these highlights from the federal budget 2021-22, visit: Budget Overview 2021-22
To understand how your Australian business can take advantage and get ahead, speak with a business growth expert at Tenfold. Contact us here.
Ashley Thomson B.Eng. (Hons), Grad. Dip. Mgmt, MEI
Tenfold Business Coaching