The recent Federal Government Budget had several initiatives that were designed kickstart the Australia economy. The Economic Recovery Plan for Australia included tax cuts designed to significantly boost the country’s GDP with the plan to create an additional 100,000 jobs by the end of 2021–22.

Big-ticket tax breaks

The most significant initiatives for businesses were a new instant asset write-off incentive – a temporary measure that is set to cost the Government $26.7 billion. Federal government estimates are that approximately 3.5 million businesses around Australia can immediately and fully expense the purchases of eligible depreciable assets, without a limit in the cost of the asset.

This is supported by a temporary loss carryback, allowing around 1 million companies across the county can claim additional tax refunds on profits made during the 2018-19 and 2019-20 financial years, offsetting overall tax losses from this financial year and the next.

In addition, the Government will also support business research and development by investing an extra $2 billion into an existing program of R&D tax cuts called the Research and Development Tax Incentive.

10 new concessions for SMEs

There’s also a set of tax breaks specifically targeted at small and medium businesses which have been included in the Economic Recovery Plan for Australia. Eligible businesses with a turnover between $10 million and $50 million can access up to 10 concessions for the first time, and these will be introduced in stages over the next financial year.

Stage 1 – which is backdated to the beginning of this financial year – covers immediate deductions for eligible start-up expenses and immediate deductions for eligible prepaid expenditure.

Immediate deductions for eligible start-up expenses can cover some of the costs incurred before a business is in operation, such as some type of legal or accounting advice and the cost of raising capital. Immediate deductions for eligible prepaid expenditure can cover some costs of business activities that will occur or be completed in a later financial year.

From April 1, 2021, eligible businesses will be exempt from paying the 47% fringe benefits tax on car parking provided to employees. Those businesses will also receive an exemption from the 47% fringe benefits tax on multiple portable electronic devices – such as mobile phones or laptops – provided to employees for work purposes.

Then from July 1, 2021, eligible businesses will be able to access six additional concessions:

• Simplified trading stock rules, meaning there’s no need to conduct a formal stocktake or account for the changes in the value of trading stock.
• The ability to remit PAYG instalments based on GDP adjusted notional tax.
• Monthly settlement of excise duty on eligible goods.
• Monthly settlement of customs duty monthly on eligible goods.
• A two-year amendment period for income tax assessments for income years 2021-22 and 2022-23.
• A simplified accounting method of determination for GST purposes if deemed necessary by the Commissioner of Taxation.

For more information regarding these and other tax concessions that are part of Budget 2020, click here to read the Federal Government’s fact sheet.

The above information is a brief summary only and does not take into account your personal needs and is not a substitute for independent professional advice. We strongly recommend that you speak to your accountant as they will be able to provide you the most suitable advice for your individual circumstance and to ensure that you are also always receiving the most up to date information.