Federal budget 2021: small business update

A focus on digital

Driving a digital economy is a top priority for this year’s budget and there will be associated benefits for small businesses. A $12.7 million boost to the Digital Solutions – Australian Small Business Advisory Services (ASBAS) program is set to help 17,000 businesses access free or subsidised advice on ecommerce, social media, data security and business software as well as wider business issues such as continuity planning and post-pandemic recovery.

Electronic invoicing received a $15.3 million boost with the aim of seeing businesses adopt a more efficient, cost effective and secure way of invoicing.

Tax incentives for brewers, gaming and tech

Eligible brewers and distillers will be able to claim a refund on any excise they pay up to an annual cap of $350,000. Previously they were only entitled to a 60% rebate on up to $100,000 per year. This will help an industry that employs about 15,000 Australians to invest in the hiring and employment of staff, new facilities and improved equipment.

This year’s budget also includes tax incentives for local video game developers. From July 2022, the Digital Games Tax Offset provides a 30% refundable offset on local game production. With $500k minimum qualifying expenses, time will tell whether this benefit is taken up by small businesses.

Biotech and medtech entrepreneurs are set to benefit from the budget’s $206.4 million tax incentive scheme whereby income derived from Australian owned and developed patents will be taxed at a concessional rate of 17%. The aim is to keep research and development in Australia by offering a much lower tax rate than either the company or personal tax rates.

The concession will come into effect from 1 July 2022 and will be available for patents applied for and granted after the budget announcement.

Small business tax breaks are back for another year

In a move the Treasurer says will benefit more than 99% of businesses, employing some 11 million people, temporary full expensing has been extended for another year. Eligible businesses will be able to write off the full costs of assets used or installed for use by 30 June 2023.

The loss carry back scheme has also been extended for another year and allows eligible businesses to obtain a refundable tax offset by choosing to carry back losses to earlier years.

This will be especially useful to small businesses that have been put into a loss situation by taking advantage of the instant asset write-off provision.

The superannuation monthly threshold is abolished

Small businesses owners should be aware that the $450 monthly minimum income threshold for superannuation will be abolished come mid-2022.

It’s a tough break for small businesses that employ anyone earning less than $450/month as their superannuation costs will likely increase, but it’s an important step for equality – approximately two-thirds of those earning less than the threshold are women, and this will go some small way to closing the gender gap in super balances.

Employee share schemes get overhauled

Currently, if employees leave a workplace from which they’ve bought or been granted shares, they are no longer entitled to tax concessions on those shares.

A $500 million overhaul of the employee share scheme system is set to change this and will ensure employees don’t have to pay tax on their shares even after they leave a business.

This is good news for emerging businesses who want to use employee equity as a means to attract the best talent.

For further information and the full details of the Federal Budget for 2021-22, visit www.budget.gov.au.

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