Post 2020 Budget: What financial support is my business eligible for?

By Katherine O'Chee · · 3 min read
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Woman business owner opening her cafe

For small businesses across Australia this may have been one of the most important federal budgets yet. On top of extended coronavirus stimulus packages like JobKeeper, the 2020-21 Budget was a ray of hope that more financial relief would be rolled out to help companies and the economy recover from the current recession. 

So what exactly is the federal government pledging to deliver to support small to medium-sized enterprises (SMEs) through this period? From tax offsets to a new wage subsidy program, there’s lots in the pipeline to watch for. 

In fact, businesses are set to receive $31.6 billion in tax breaks - almost twice as much as households. But unlike households, the business tax incentives are only temporary, with an aim of encouraging more investment in jobs and ‘big ticket’ items (like new equipment and machinery) over the next few years. 

Read on for a snapshot of budget support measures for your small business:

Full expensing

  • When: 6 October 2020 - 30 June 2022
  • Who’s eligible: Businesses with annual turnover up to $5 billion

Under this scheme, businesses with up to $5 billion in annual turnover can claim immediate tax deductions on the full cost of eligible assets of any value - as long as they’re purchased from 6 October 2020 and first used or installed by 30 June 2022. They’ll also be able to fully deduct the cost of any improvements made to existing assets. 

Asset purchases could include: computers, coffee machines, motor vehicles, point of sale terminals and more - basically anything needed to help you run your business. 

For SMEs with up to $50 million in annual turnover, “full expensing” also applies to all secondhand asset purchases. But for businesses earning between $50 million and $500 million per year, that threshold drops to $150,000 for each secondhand asset (see instant asset write-off for more info).

Extended instant asset write-off

  • When: 12 March 2020 - 30 June 2021
  • Who’s eligible: Businesses with annual turnover up to $500 million

Speaking of which, the government has also extended its instant asset write-off scheme by another six months, until 30 June 2021. For businesses earning up to $500 million per year, this allows them to instantly write off multiple eligible asset purchases capped at $150,000 each.

Loss carry-back to boost cashflow

  • When: Applies to 2019-20, 2020-21 and 2021-22 income years
  • Who’s eligible: Businesses with annual turnover up to $5 billion

This scheme will help businesses offset any losses they’ve made through this period by allowing them to claim back taxes paid on profits made from 2018-19 onwards. So if you’ve made a loss in the last, current or next income year (but a profit in earlier years), then you may be eligible for the cash refund.

Previously, companies had to wait until they returned to profitability before they could offset their losses, but Treasurer Josh Frydenberg said that’s no longer a feasible option. 

“In order to keep their workers, these businesses need our help now,” he said. “They cannot wait years for the tax system to catch up.”

JobMaker wage subsidy

  • When: 7 October 2020 - October 2021
  • Who’s eligible: Businesses that hire eligible employees between 16-35 years old

As JobKeeper gets tapered off, the government has introduced a new wage subsidy program called ‘JobMaker’, which aims to create more jobs for young Australians.

Under this scheme, businesses will receive a credit for every eligible employee they hire. They can claim $200 per week for each new employee aged 16-29 and $100 per week if they’re 30-35 years old. 

To qualify for JobMaker, there’s a few other boxes to tick:

  • The employee must have received income support payments like JobSeeker, Youth Allowance or the Parenting Payment for at least one of the three months before getting hired.
  • The employee must work at least 20 hours per week on average.
  • The employer mustn’t claim JobSeeker at the same time.

You’ll be able to make claims once every quarter, for up to 12 months from the employee’s start date. The first claim period begins in February 2021.

Increased threshold for small business tax concessions

  • When: Rolled out in three phases (1 July 2020, 1 April 2021, 1 July 2021)
  • Who’s eligible: Businesses with annual turnover from $10 million up to $50 million

The government has also announced that firms with a turnover of below $50 million will soon have access to a number of small business tax concessions. These concessions were previously only available to companies earning $10 million a year, and include:

  • Immediate tax deductions for certain start-up and prepaid expenses
  • Exemption from the 47% fringe benefits tax (FBT) on car parking and work-related portable electronic devices provided to employees (e.g. phones, laptops).

For a list of other bank and government support measures, head over to our guide on coronavirus and your finances.