2020 Federal budget highlights for business

Federal Budget

Source – Business Australia


Last night the Federal Government delivered one of the most anticipated budgets in history since the great depression. The ‘job-centric’ 2020 budget, aims to help the country rebuild post-coronavirus by supporting businesses to hire new staff, and put money back into their pockets.

Business takes its place at the heart of the economic recovery with a range of measures to support investment and the creation of jobs. The key highlights for businesses include:

Investment boost

Effective immediately (until 30 June 2022), businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. This is a major incentive for businesses to bring forward investments and represents a $26.7 billion commitment over the forward estimates.

JobMaker Hiring Credit

The Budget announces support for young people looking for work. From tomorrow, businesses that take on a jobseeker will receive a payment of $200 a week for an eligible young person aged 16-29 years and $100 a week for a young person aged 30 to 35 for up to 12 months. Employers must demonstrate they have increased their overall employment. This will help employers get young people back into work, ensuring we do not lose a generation of workers to this crisis. It is estimated the $4 billion scheme will support around 450,000 young Australians into jobs.

Apprentice and trainee subsidy

A skills package for young workers, including a $1.2 billion package for employers take on new apprentices or trainees. The subsidy extends support for existing apprentices and trainees. The 50 per cent wage subsidy will support 100,000 new positions, a vital step towards maintaining a pipeline of skilled workers at a financially difficult time for business.

Temporary loss carry-back

The Government will also allow companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid to generate a refund. Loss carry-back will be available to around 1 million companies that employ up to 8.8 million workers. This measure is expected to deliver $4.9 billion in tax relief to businesses over the forward estimates.

Business tax concessions:

An additional $2 billion will be invested through the R&D Tax Incentive, including increasing the refundable R&D tax offset and removing the cap on annual cash refunds for small claimants. Larger claimants will be subjected to a streamlined intensity test with the cap lifted from $100 million to $150 million a year. Businesses will also receive FBT tax concessions if they pay to retrain or reskill workers. Businesses with an annual turnover of between $10 million and $50 million will gain access to up to ten small business tax concessions. This will include being able to immediately deduce certain start-up expenses, as well as FBT exemptions for car parking and eligible work-related electronic devices.

Support for the construction sector

With a sharp slump in population growth, the Budget announces several new initiatives to boost construction. This includes additional incentives for first home buyers to purchase new dwellings, boosting arrangements to encourage institutional investment into affordable housing and a capital gains tax exemption for granny flats (where there is a formal arrangement for older Australians or persons with a disability). These initiatives complement the existing HomeBuilder scheme ($25,000 grants for eligible renovations or new builds) which applies to eligible contracts entered into up to 31 December 2020.

Manufacturing-led recovery

The Government will invest $1.5 billion to boost Australian manufacturing in areas where Australia already enjoys an advantage. The Modern Manufacturing Initiative will support Australian businesses to scale-up in priority areas including resources technology, food and beverage, medical products, recycling and clean energy, defence and space. Roadmaps to guide investments in these priority sectors will be co-designed with industry. Manufacturing will also be boosted by recent announcements relating to gas supply.

Regional tourism recovery

The Government will invest over $250 million for a Regional Tourism Recovery Package. Regional communities will benefit from $200 million in grants through the Building Better Regions Fund with $100 million of the fund earmarked for tourism-related infrastructure projects that will boost regional tourism.

Fringe Benefits Tax (FBT) exemption – employer-provided retraining

The Government announced that certain employer-provided retraining and reskilling will be exempt from FBT. This supports businesses to retain their people by transitioning to new employment opportunities within or outside their business. Effectively treating retaining and reskilling costs incurred by employers and provided to reductant or soon to be redundant employees, as exempt from FBT from 2 October 2020.