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Budget 2019: Key measures for small and medium businesses

BudgetBusinessIncentivesIs your business planning to purchase new assets? Perhaps new tools, a vehicle or computer upgrade? If so, you may be able to take advantage of the Coalition’s expanded “instant asset write-off” incentive.

Find out how your business will benefit from this and other key measures in this year’s federal budget.

This year, the Coalition has delivered a couple of key budget sweeteners for small and medium businesses. These measures will kick in soon – or are already in place – so businesses should start considering their planning opportunities now.

Instant asset write-off expanded

This write-off is a tax relief measure running until 30 June 2020 that allows eligible businesses to claim an “instant” deduction (ie in the current year’s tax return) for certain asset purchases, rather than having to deduct this expenditure over time. The instant write-off helps businesses with their cashflow and increases opportunities to reinvest and employ more workers.

For the first time, medium-sized businesses (with annual turnover below $50 million) now qualify for the write-off with effect from Budget night (2 April 2019). Previously, only businesses with turnover below $10 million were eligible.

The asset cost threshold has also increased from $25,000 to $30,000, meaning eligible businesses can now deduct depreciating assets costing up to $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020. The $30,000 threshold applies per asset, which means your business can instantly deduct multiple assets that each cost less than the threshold.

Fortunately, this announcement has already been legislated ahead of the upcoming federal election – bringing some welcome certainty for businesses. There have been several changes to the write-off in recent years. The following table summarises the thresholds that apply in different periods:

Date asset first used, or installed ready for use Threshold: small businesses (turnover < $10 million)* Threshold: medium businesses (turnover ≥ $10 million but < $50 million)**
7.30pm AEST 12 May 2015 to 28 January 2019 $20,000 n/a
29 January 2019 to 7.30pm AEST 2 April 2019 $25,000 n/a
7.30pm AEST 2 April 2019 to 30 June 2020 $30,000 $30,000

* In all cases, small businesses must also have purchased the asset on or after 7.30pm AEST 12 May 2015.

** Medium-sized businesses must also have purchased the asset on or after 7.30pm AEST 2 April 2019.

Greater incentives to hire new apprentices

If you operate in a recognised industry, you may be eligible for increased incentive payments to take on new apprentices. This measure is designed to address skills shortages in the following trade occupations: carpenters and joiners, plumbers, hairdressers, air-conditioning and refrigeration mechanics, bricklayers and stonemasons, plasterers, bakers and pastry cooks, vehicle painters, wall and floor tilers, and arborists. This list will be updated annually as industry needs change.

From 2019–2020, employers hiring a new apprentice in an eligible occupation will receive an extra $4,000 incentive payment ($2,000 after 12 months and $2,000 at the completion of the apprenticeship). This is in addition to the existing $4,000 incentive payment, bringing the total employer incentive to $8,000. The apprentice will also receive a $2,000 incentive payment ($1,000 after 12 months and $1,000 at completion). The initiative aims to create 80,000 new apprenticeships over five years.

Lower personal taxes to boost consumption

Businesses are welcoming the Coalition’s personal income tax cuts as greater take-home pay for taxpayers means more demand for goods and services. In the short term, Australians earning up to $126,000 per annum will receive an annual tax offset of up to $1,080 for the next four years. Then, commencing in 2022–2023, the Coalition will roll out significant personal tax reform that, when complete, will see someone earning $100,000 save over $3,000 in tax and someone earning $200,000 save over $11,000. The RBA says the cuts will help to encourage consumer spending.

Expert business advice

We’re here to help your business take advantage of these budget announcements. The instant asset write-off is only available until 30 June 2020, so talk to us today about tax planning for your new asset purchases.