Small businesses are essential to Australia's economic recovery from the pandemic - and the Federal Government's 2021 Budget is a clear acknowledgement of that, delivering a number of measures to help small businesses move forward. The Government's focus for industries and employers, including small businesses, is to help drive digitisation so businesses can keep up with the changing landscape and consumer expectations. And more broadly the budget includes lower income taxes that aim to build consumer confidence and encourage spending – which will ultimately benefit small businesses.
Below are my five key takeaways from the Federal Budget 2021 and what it could mean for Aussie small businesses in the year ahead.
Incentives for hiring and upskilling employees
The Government is offering up to $32,000 for businesses to put towards a new employee’s salary and training if they are enrolled in a registered course in a key occupation or skills area, like customer engagement or digital business. This is a huge help for businesses that are looking to digitise but may not have the resources to outsource a consultant or hire a new full-time employee. Small Business Australia can help you find a course that’s right for your trainee – and with the help of this budget incentive, you can take a practical step towards preparing your business for the future.
Key tax benefits
A number of tax benefits have been extended or newly introduced to help businesses invest and grow.
- The temporary loss carry-back measure is a tax scheme that will allow eligible businesses to carry back tax losses made in 2020-21, 2021-22 and now 2022-23 to offset tax paid on profits from 2018-19 onwards. This will be particularly useful for businesses that were successful before COVID-19, but took a significant hit due to the pandemic by helping to increase cash flow.
- The temporary full expensing tax measure (now extended to 30 June 2023), enables businesses to apply a more accelerated depreciation rate on pre-existing eligible assets. This will increase deductions and reduce tax payable for businesses.
- Businesses can receive a full tax write-off for the majority of new assets purchased for business purposes (like IT hardware and teleconferencing infrastructure). And in some cases, where the cost is paid for upfront, software (like collaboration tools and cyber security programs) will also be eligible.
It’s essential to seek detailed tax advice from a qualified advisor to maximise your legal entitlements under these budget measures.
Industry- and state-specific benefits
Several initiatives and support measures were announced for specific industries, like reduced taxes for craft brewers and tax breaks for the video gaming industry. And because some sectors – like agriculture, international education, tourism, events and hospitality – were particularly affected by the pandemic, the Government has provided increased funding for these areas. At a state level, there are also various initiatives in place and some increased funding may be announced in state budgets. Small businesses could be eligible for a number of these benefits, which could help with recovery and cash flow.
Stay up to date with future announcements (like state-specific funding) by tapping into your business networks and small business organisations to make sure you access what you are entitled to. Joining a business network – whether that’s through Facebook groups, local community groups or a registered network like Small Business Australia – can help you stay on top of important business news and updates.
Opening global markets
Showing its commitment to help businesses succeed in the global market, the Government has updated the Export Market Development Grants scheme. These grants provide businesses with additional financial support over several years to take their business to the world, and now they will be more flexible and responsive to the needs of eligible businesses. The rapid uptake of digitisation means that now any small business that wants to go global can – whether the business is selling a product made here in Australia or delivering a service online. Telstra’s Digital Marketing experts can help you set up and manage an effective eCommerce website for your business or implement SEO strategies to help you reach new markets.
Innovation, research and development
The Government has introduced a patent box, which means that small businesses in the medical and bioscience sectors that are creating patentable intellectual property will be able to pay a lower tax on the income these patents generate. Complementing the Government’s $2 billion investment in the Research and Development Tax Incentive announced in the Federal Budget 2020, this aims to encourage businesses to undertake research and development in Australia and help start-ups keep their business in the country when they succeed in commercialising their patents.
The Federal Budget 2021 encourages small businesses to move towards digitisation – with incentives to help businesses recover, keep up with the changing landscape and meet consumer expectations. Digitising your business can help open up more opportunities in a competitive landscape, and now could be the right time to implement or improve existing tech in your business.