Hello, my name is Bill Lang. I’m the Executive Director of Small Business Australia and I’d like to provide you with a high-level overview of the impact of the federal budget and the benefits for small business operators.
More money to everyday Australians
First of all, and on an overall level, the budget is quite positive, in that up to 10 million Australians will have more money in their pockets over the next seven to eight months, which will be available for them to spend, ideally with their local small businesses.
Fuel tax cut
In addition, over the next six months, there has been a cut in the petrol tax from its normal level of 44 cents a litre. Yes, that’s right, 44 cents a litre is what is typically being taxed, that you’re paying every time you buy a litre of petrol that has been cut by 22 cents for the next six months. So that will also alleviate some of the money that would go to an essential like petrol to be available for other personal and household expenses.
Cap on PAYG and GST
Another overall benefit to small business operators is the fact that the Pay As You Go (PAYG) and GST, sort of automatic instalments that are calculated by the ATO, have in the past been increased by 10% annually. There is now a cap, no more than a 2% increase. Now it doesn’t have an impact on ultimately the amount of tax that you will pay, but as we all know, cash flow is the lifeblood of every small business and it means that you will have some additional cash in the business’s bank account up until the time you do that annual reconciliation to adjust tax paid for tax owed based on how profitable the business has been.
Tax deduction – digital tools and technologies
I’d now like to talk about two areas where there are some direct incentives in the forms of additional tax deductions for small businesses to take advantage of, one of these areas is the area of the use of digital tools and digital technologies. The government is effectively providing an additional 20% tax deduction. So at the moment when you spend money on things to help digitise your business to better compete and operate in this digital world, you can write off or get a 100% tax deduction for the money that you spend on those things. That is now being increased to 120%, although you won’t get that extra 20% over the next three months in the 2021 tax year, it will apply in the 2022 tax year.
Tax deduction – training
A similar approach is being taken to training. So assuming that you purchase training for your employees from an approved training provider, there will be a 120% tax deduction that you will be able to claim. So the government there is looking to provide some additional incentive to reduce, you know by 20 odd percent, the net cost to the business of having employees upskilled and trained by approved training providers.
Benefits – Traineeships
There’s a very short term benefit and opportunity for any small businesses looking to employ new people in the next three months. The very successful building apprenticeships and traineeships scheme has been extended from the end of March to now end at the end of June. I encourage you to learn about this, we have lots of materials available on the Small Business Australia website about the topic of traineeships. While we always hear the word apprenticeships in budget documents and on government websites, in fact, every small business is eligible for up to $28,000 towards the cost of a new employee if hired in the next three months, and if they are undertaking an approved traineeship training program. These training programs can typically be completed within a 12 month period. So unlike blue-collar apprenticeships, which may take up to four years to complete, a traineeship can often be done within 12 months so for any business that’s looking at hiring anyone, whether it be part-time it’s a lower amount of financial incentive or full time, you should most definitely look into taking advantage of this significant financial support to help you employ and train new employees.
Additional – Buy Local free listing
Look in addition, we have a number of other resources available at Small Business Australia. We encourage you to take advantage now of your free listing in our Buy Local directory. You can find out more about that at buylocal.smallbusinessaustralia.org. So together with our partners now we’re enabling any small business in Australia to be easily found as a local business through that particular specialist website buylocal.smallbusinessaustralia.org.
Additional – Business Advantage
For those of you that are yet to take advantage of our online Advisory Service and our Coaching offerings, we encourage you to come and look at BusinessAdvantage.online, where you can access advice in real-time, set up appointments with our coaches, as well as access a range of other significant savings on everyday business expenses, including the costs of approved training programs and IT services.