2020 Federal Budget and Your Business

Article by
Philip Martin
PMCA
October 2020

See how your business can take advantage of the 2020 budget

5 minutes

The 2020 Federal budget was always going to be big.

Big deficit, big changes and an enormous grab-bag of schemes and announcements, all designed to put Australia back on the road to post-COVID recovery as soon as possible.

Gone is any talk of surplus – it turns out it  mightn’t be so bad after all.

While the economic havoc brought on by the  pandemic is far from over, this budget has seen some significant announcements  that affect small and medium-sized businesses.

Politics and economics

Of course, budgets are never set in stone. Firstly, they need to pass through Parliament. And while there’s unlikely to be too much push-back, the Opposition has already flagged some concerns.

Add to that the fact that budgets are based on forward estimates. It is – as political commentator Laura Tingle writes –like playing pin the tail on the donkey.

Read the entire 2020 Budget here

Impact on wages and prices

With “spare capacity in the market” (lots of people without jobs) wages are set to stay stagnant for the rest of 2020.The government predicts that a gradual uplift in economic activity – more travel, more spending, and a slew of massive infrastructure projects – will mean there’ll be a gradual uptick in wages through 2021.

For exactly the same reason that wage growth is set to remain steady in the near future (confidence is low, incomes are down and the future is uncertain),the 2020 budget also predicts that prices for good and services aren’t set to rise much over the next year or two either. This is no surprise, given that consumer prices actually fell in the June quarter, by a record 1.9 per cent.

Tax Implications

The biggest news out of the budget that impacts on SMEs is tax related. Depending on the size and structure of your business there are several announcements that are designed to reduce your tax burden and actually encourage you to spend, both on capital equipment and on new employees.

Some of these announcements are hard to get your head around if you’re not naturally a numbers person. At PMCA we are always happy to help explain how recent announcements can be used to strengthen your business.

Although company tax collections fell more than $13 billion short of expectations, the government understands that business health and activity is the biggest key to recovery. In fact, the budget offers roughly twice as much to businesses than to individuals.

The existing Instant Asset Write-Off scheme has been extended, so all businesses that turn over less than $5 billion can immediately write off the value of assets they purchase (provided they are first used or installed by 30 June 2022.

These same businesses will also, for a limited time, be able to reclaim any tax already claimed against past profits that they paid tax on. And in a further change to the tax system, any business losses up to June 2022 can be offset against profits made since the 2018–19 financial year.

If you have any questions, feel free to get in touch. We’re happy to help

The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained. We are here to help, contact us today:

Philip Martin Chartered Accountant
Phone 1300 744 547 | Web pmca.com.au | Email philip@pmca.com.au
Level 9, 440 Collins Street, Melbourne, Vic 3000

For sole traders who operate more like a PAYG taxpayer, the budget promises a more generous income tax system.

  • The tax-free threshold remains at $18,200, with those earning more than that paying19 per cent tax.
  • Those earning between $45,000 to $120,000 will pay 32.5 per cent tax.
  • Anyone earning between $120,000 and $180,000 will pay 37 per cent.
  • Those earning over $180,000 will pay 45 per cent.

The budget also promises that from 2024, things will be even more simple; the main feature a flat 30% rate for all earning between$45,000 and $200,000.

Of course, these changes need to be legislated and the Federal Opposition, while approving most changes, are opposing the future flat rate of 30 per cent for all income between $45,000 and $200,000.

Time will tell, although the government is in a big hurry to get these changes enacted.

See the ABC’s article and tax calculator

Hiring incentives

If you’ve been planning on taking on a new apprentice, now could be the time, as the budget is offering a 50 per cent wage subsidy for any new Australian apprentice.

For other employees, the new JobMaker hiring credit provides incentives to anyone who can employ a young person in the next 12months.

There are eligibility criteria, however most businesses taking on new people will be able to claim:

  • $200 a week for a person aged 16 to 29 years; and
  • $100 a week for a person aged 30 to 35 years.

We’ve just scratched the surface here, and there are more programs available, depending on your business. There are a series of small concessions for businesses turning over between $5 and $10 million, and the $7.5 billion infrastructure spend will be something some SMEs can be part of.

Download Deloitte’s detailed analysis of Budget 2020

Call PMCA to see how your business can benefit from Budget 2020.

Ready to get on top of your tax and accounting?

Philip Martin can change the culture of your business to ensure independent financial strength.
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What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

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What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

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What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

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