The federal budget is providing a further $25 billion in temporary and targeted support under the COVID-19 response package, together with another $74 billion under the JobMaker plan.
This brings the government’s overall response and recovery support to $507 billion since the onset of the pandemic, over half of which is direct economic support.
The measures announced under the $74 billion expansion of the JobMaker plan are perhaps the most relevant for small business recovery.
Measures such as the accelerated delivery of tax cuts will result in more money being spent on the purchases of goods and services from local businesses, while tax concessions and other employment subsidies for business owners will temporarily reduce employee costs.
The new JobMaker measures are designed to encourage business growth and support the restoration of jobs lost due to the COVID-19 economic downturn.
Some of the measures announced by Treasurer Josh Frydenberg in his budget speech include:
The Treasurer also made a very welcome announcement of the immediate expansion of the instant asset write-off measure, allowing businesses with an annual turnover of up to $5 billion to fully depreciate investment on assets of any value between now and June 30, 2022.
A new hiring credit will provide eligible business owners with a wage subsidy ($200 per week for new 16–29-year-old workers and $100 per week for 30–35-year-old workers) for a period of 12 months following their commencement.
To be eligible, new employees must have been in prior receipt of the JobSeeker payment and be employed before October next year.
Another significant announcement is related to the provision of a temporary capacity of business owners to offset taxes paid on profits since FY19 against losses incurred in FY20, FY21 and FY22, allowing these businesses to potentially earn a tax refund in the future.
While these measures may appear relatively modest in isolation, when considered in aggregate, they create a climate of confidence at a time when most small business owners are struggling with unprecedented uncertainty.
For that reason, alone, the measures announced for small business in the federal budget are very welcome indeed. The real test will be how they work in practice over the coming year to support the restoration of small business jobs lost over the past nine months.
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