There are four major themes with regards to the 2019-20 Federal Budget – all of which target strengthening the national economy. In relation to small business owners, the budget aims to lower taxes to encourage and reward hard working Australians.
Small and medium-sized businesses are the backbone of the economy, employing over 7 million workers. Therefore, the new budget will keep supporting these businesses to ensure stable economic growth. It will also allow for over 3 million small businesses nation-wide to grow and create more jobs.
Instant Asset Write-Off extended and expanded
The instant asset write-off that allows small businesses to write-off any assets has been extended and expanded. As of April 2 2019, to June 30 2020, the write-off will increase to $30 000 from $25 000.
The threshold for accessing the write-off has also increased from $10 million to $50 million. This means that an additional 22 000 businesses employing 1.7 million people will now have access to this scheme.
The tax rate has reduced to 27.5% for small business owners who have an annual turnover of less than $50 million. By 2021-22, this will decrease to 25%.
Training, education and employment
A key constraint for small-to-medium sized businesses is skill shortage. The budget aims to invest $525 million in vocational education and training. $62.4 million will be invested into launching a new foundational language, literacy, numeracy and digital skills program.
The government will also invest $17.7 billion into the university sector in 2019-20. This will provide scholarships for students to study regionally or through a vocational education training provider.
Export Market Development Grants (EMDG) scheme
This scheme will reimburse marketing and advertising expenses to aspiring and current small businesses that export overseas. The Federal Government has announced an increase in funding this scheme by $60 million over three years from 2019-20.
This boost in funds will allow small business owners to generate exposure in overseas markets. Allowing them to develop brand recognition and build relationships with potential customers. In the year of 2018, approximately 3 500 businesses accessed this scheme, generating $3.8 billion in exports.
Personal tax changes
From 2018-19 the Government will reduce income taxes for low-middle income earners. The changes to income include:
- Reducing low-middle income earners tax by up to $1080 for single earners and up to $2160 for dual income families
- The 19% bracket threshold will increase from $41,000 to $45,000 in 2022-23. The low-income tax offset will increase from $645 to $700.
- The tax rate will decrease from 32.5% to 30% by 2024.
New ABN regulations
From July 1, 2021, the Government are requiring ABN holders with a taxable income to lodge a tax return. This will protect the ABN system against black economy behaviour. Furthermore, from July 1, 2022, the Government will require all ABN holders to “confirm the accuracy” of the accuracy of their details annually. These efforts aim to hold businesses more accountable for meeting their obligations.
For more detailed information on what this could mean for you and your small business, head to https://www.budget.gov.au.