The 2020-21 Budget includes $98 billion in response and recovery support, including $25 billion under the COVID-19 Response Package and $74 billion under the JobMaker Plan.
The National Insurance Brokers Association (NIBA), CEO, Dallas Booth says, “So far the most relevant information for insurance brokers as business owners – and their clients – are the business tax initiatives that are predicted to help businesses grow and assist in our overall economic recovery.”
The budget introduces temporary full expensing of eligible depreciable assets for businesses with turnover up to $5 billion from 7:30pm (AEDT) on 6 October 2020 until 30 June 2022. The measure will be available to around 3.5 million businesses (over 99 per cent of businesses) that employ around 11.5 million workers.
Insurance Council of Australia, CEO, Andrew Hall welcomed the Federal Budget as a strong step towards Australia’s recovery from the COVID-19 pandemic and devastating summer bushfires.
He said, “The industry is encouraged by Treasurer Josh Frydenberg’s statement that further announcements in relation to natural disaster mitigation will be made in response to the Royal Commission into National Natural Disaster Arrangements.”
Companies with turnover up to $5 billion will also be able to temporarily, up to June 2022, offset tax losses against previous profits and tax paid in or after 2018‑19. This will help companies that were profitable and tax paying but now find themselves in a loss position due to the COVID-19 pandemic. By allowing them to access their losses earlier, by way of a cash refund, it will provide a needed cash flow boost to keep their business running, retain their workers and invest with confidence in the future.
Temporary loss carry‑back will be available to around 1 million companies that employ up to 8.8 million workers.
Temporary full expensing creates a strong incentive for businesses to bring forward investment to access the tax benefit before it expires. Temporary loss carry‑back further assists companies that would experience a loss to take advantage of the temporary full expensing measure.
Combined, the two measures are estimated to deliver $31.6 billion in tax relief to businesses over the forward estimates period, supporting around $200 billion worth of investment.
Treasury estimates that these budget measures will boost GDP by around $2.5 billion over 2020-21 and $10 billion over 2021-22 and create an additional 50,000 jobs by the end of 2021-22. You can read more about the business initiatives in the Federal Budget here.