2020-21 Budget: here's how your business can benefit

Hansy Mannil Jul 10, 2023

Here’s the good news upfront; under the 2020-21 Budget delivered by Josh Frydenberg last night, 99% of Australian businesses are about to benefit from an estimated $27B worth of tax breaks. If there was ever a time for financial support, it’s now, and the actions the Government is taking are sure to assist many businesses both small and large to help get the economy moving again.

Here's a quick summary of what we cover below:

Key business features of the 2020-21 Budget
Great commercial vehicle deals
Financial solutions to support and grow your business
Access a range of other helpful financial info

Key business features of the 2020-21 Budget

Here's a break down of the key business features and benefits of the 2020-21 Budget:

Full deduction of eligible assets for companies with turnover up to $5B

To meet the criteria, all you need to do is purchase an asset after Tuesday 6th October 2020 and be first used before June 30 2022. Assets that are covered by existing depreciation rules are covered and buildings remain excluded. This plan applies to both new depreciable assets and the cost of improving existing eligible assets. For small to medium businesses, second hand assets will also be covered.

In addition, the enhanced write-off rules (for businesses with turnover between $50-500M) are still able to deduct the full cost of the eligible asset purchase under $150,000 on the basis they’re acquired by December 31 2020. For businesses that hold assets that are eligible for the enhanced write-off program are being given an extra 6 months, up to June 30 2021 to first use the asset.

Generate a tax refund on losses

For companies with turnover up to $5B, the Government will allow the offsetting of losses against previous profits on which tax has been paid to generate a refund. Losses incurred up to 2021-22 can be carried back against profits made in or after 2018-19. Eligible companies may elect to receive a tax refund when they lodge their 2020-21 and 2021-22 tax returns.

Enhanced research & development incentives

For small businesses accessing the R&D tax incentive, the refundable R&D tax offset rate has been lifted to 18.5% on top of your tax rate, an increase of 2.5%. Coupling this with the reduction in small business tax rate for FY21, the total offset increases to 44.5%. The Government has also announced the removal of the $4M cap on annual cash refunds, meaning more cash back to smaller businesses who are investing in our future. These changes become effective from July 1 2021.

JobMaker hiring incentive

To help spur hiring of those impacted by the pandemic induced recession, the Government has announced a credit available to those businesses who increase their overall headcount to hire employees aged 16-35 who are currently earning JobSeeker payments. The payments are between $100-200 and paid quarterly in arrears.

For a full breakdown of the 2020-21 Budget, view the official link here.

Great commercial vehicle deals

Take advantage of the new tax breaks and asset write off opportunities and talk to our new car buying partners carconnect (a part of the Stratton Finance family). They'll do the haggling with dealerships for you, get you a great price on your car and deliver it direct to your door or worksite. It's all done online!

Here's a selection of great commercial vehicle deals we have access to (amongst many others!), and you may be able to utilise the enhanced instant asset write-off incentive with:

^ Whilst carconnect expects to be able to source these prices or better for our customers, actual prices will depend on use, payment option, location and availability.

^^ This weekly repayment estimate is provided by Stratton Finance Pty Ltd (Australian Credit Licence: 364340. ("Stratton"). Stratton is a finance broker. This repayment is calculated with an interest rate of 4.95% p.a. over a term of 60 months with a 0% residual / balloon payment. Other residual / balloon amounts are available. The vehicle price shown may not include other additional costs such as stamp duty, government fees and other charges payable in relation to the vehicle. In order to provide this estimate, Stratton are required to make several eligibility assumptions, including property ownership. To comply with regulations, consideration may be given for credit score and loan to value ratio (LVR), this estimate has been calculated with an LVR of >90%. This estimate is based on several assumptions outlined above and should be used for information purposes only and is not an offer of finance on particular terms. Credit fees, service fees and charges may apply. Credit to approved applicants only. A quote, details of all fees and charges may be obtained by contacting Stratton via strattonfinance.com.au or calling 1300 STRATTON (1300 787 288).

Grab the government stimulus benefits with both hands

If you're not already well versed in the Government stimulus package the Government has offered Australian businesses, here's a quick recap of some key elements:

Instant asset write-off - an accelerated instant asset write off which has been increased up to $150,000 from $30,000
Cash flow / employment assistance for small business - providing payments to companies with turnover up to $50M, as well as wage subsidies for apprentices or trainees
JobKeeper - a business support package providing $1,500 per fortnight per employee for impacted, eligible businesses

Once you've spoken to your accountant and established what benefits your business can utilise, contact us so we can help you finance the assets you're looking to buy at a competitive rate, quick smart.

Financial solutions to support and grow your business

Inline with recent announcements by the Government to support small to medium size (SME) businesses, a number of our lending partners have released new financial solutions to better support and enable growth for SMEs. These include features such as:

An initial repayment holiday up to 6 months
Products include a line of credit, meaning you have no interest charges unless you drawdown
Unsecured loans not requiring an asset as security
Loans up to $250,000 per borrower over three years
Simple and easy application process

As always, the financial products being made available by these lenders should be considered in the context of your own business and with the consultation of your accountant. Once you've assessed this, contact us so we can help you access these solutions.

Remember, your accountant is one of your best friends for maximising the budget benefits, speak to them today!

Access a range of other helpful financial info

We regularly publish a wide a range of general financial information in our newsroom, here's a hand-picked selection of information you might find interesting:

We're here to help, anytime

So it's time to make the most of the 2020-21 budget, maximise the government stimulus, access new funding solutions or just get a great deal on your finance by calling us now on 1300 787 288 or get a 30 second online quote.

Disclaimer: the information provided above is accurate to the best of our knowledge. That said, be sure to check with your accountant about suitability and appropriateness for you and your business.