The federal budget of Australia 2020 is going to be an important one derived from the conversations of the ministers. This budget is the first attempt of the Australian government to pull the nation out of its first recession in 30 years, and naturally, it shows a few major policy changes compared to the other budgets. This year’s budget has induced the growth of the economy via spending, focusing on hiring and investments. There has been news about some significant deductions in taxes. Let us know more about the budget.
The recent budget has been prepared to uplift the country from the ongoing budget deficits. According to the statement made by federal treasurer Josh Frydenberg in July, Australia has a budget deficit of $281.4 billion, which has the previous $85.8 billion (4.3% of the GDP) for the year 2019-20, and $184.5 billion (9.7% of the GDP) for the financial year 2020. This has been deemed as the highest deficit since World War II. These deteriorating figures were one of the stimuli for the new changes in the budget, as far as business and trades are concerned.
The Australian government has made some significant changes to assist the business and to influence the growth of the economy. Especially for small businesses, they have proposed numerous significant changes with the view of extending economic growth. Here are the changes which are proposed;
For Lesser Businesses
100,000 New Internships With 50% Wage Funding
There has been a new subsidy called ‘Boosting Apprenticeship Commencements’ amounting to $1.2 billion in funding and is intended to create 100,000 new apprenticeships over the next four years. The target behind this approach is to boost the collection and economy of the failing skills, especially under pressure due to the economic slowdown caused by the ongoing COVID-19. It is also set to create work and pathways for unemployed Australians for getting training and finding work.
This means that employers are entitled to 50% of the salaries for new or re-applying trainees at a maximum of $7,000 per quarter. This is in addition to the already ongoing subsidies from March 2020.
Hiring Credit For 16-35 Year Olds
The government is starting a financial motivation for businesses to employ more staff and increase their workforce, named as JobMaker Hiring Credit. This payment will be disbursed for up to 12 months for each new profession and is available from the date of the announcement. The incentive is geared to support the businesses who want to hire new employees and offset the risk by helping with the wage cost.
With the new assistance, the employers can enjoy the following advantages;
Instantaneous Asset Write-off
From the announcement of the budgets until 30 June 2022, businesses with a turnover of under $5 billion will be able to completely erase the cost of eligible devaluing properties bought, which means the businesses will be awarded a tax deduction in the first year of buying these suitable depreciating assets. This step is thought to increase investments for small businesses. However, the table limit remains, so it would be better to consult your lawyers before buying any new equipment.
Supplementary R&D Tax Incentives
The Australian finance ministry has rescinded its earlier decision to apply cuts to the R & F rates and is instead of adding a further $2 billion to the program. The eligible companies will receive an “R & D boost” at a fixed percentage above the company tax rate levied on the concern.
The secure R&D elevation percentage will be:
The government is bringing the tax cuts meant to be in effect from 1st July 2022 forward and backdating them to 1st July 2020. This will generate an extra sum of $17.8 billion in individual income tax aid and support the economic salvage. The step is targeted to encourage spending in Australian citizens by giving it back to them. This will help the ongoing businesses to operate properly and ultimately keep the people employed and will ultimately combat the dismal hiring situation due to the global pandemic crisis. Some of the changes that will happen are;
So, these are the salient points of the new financial budget 2020 of Australia. You would need to think and invest carefully under this new Australian financial budget guidelines. It is advisable to consult your financial assistants about the best places to invest money. However, for general assistance and expert guidance on these matters, Tax Return Perth will always be there to support.