Posted by LNA Master Landscapers Association
on 3 April 2019
Last night the 2019 Federal Budget was delivered to Australians, outlining changes that will affect small and medium businesses. For LNA Members, this means tax cuts, and increase to the instant asset write off, increased infrastructure spending and investment in apprenticeships.
The instant asset write-off, which allows businesses to write-off assets (such as tools or equipment) against their taxable income,has been extended and expanded. It will now cover purchases under $30,000, up from $25,000, and can be used by businesses with an annual turnover of under $50m, up from a $10m limit previously. Medium sized businesses will welcome this new access to the scheme. The threshold applies on a per asset basis so businesses will be able to instantly write off multiple assets. Around 22,000 additional businesses employing approximately 1.7 million people will now be eligible for the tax write-off with the changes projected to cost the budget $400m over four years. These changes will apply from April 2019 to 30 June 2020 it isn't a permanent scheme like the industry had hoped for. In total, these changes will benefit around 3.4 million businesses employing around 7.7 million workers. The Government's decision to increase and extend the instant asset write-off should help to alleviate cash flow pressures for SMEs and help them with their expansion plans.
The Government also announced that the corporate tax rate for companies with annual turnover of less than $50m will fall from 27.5% to 26% next year and 25% starting in 2021/2022. This five years earlier than previously planned and is expected to benefit roughly 970,000 companies. The Government will also increase the unincorporated small business (up to $1,000) tax discount rate from 8% in 2019/2020 to 13% in 2020/2021 and 16% in 2021/2022.
In recognition of SME concerns around skill shortages (a key constraint to their output), the Budget contained a $525m investment in vocational education and training directed towards "areas of future high demand" albeit only $54.2m is new money over five years and the majority ($463m) in part from reallocating Skilling Australians Fund money unspent because Queensland and Victoria did not sign up to the scheme.
Vocational education and apprenticeship numbers have suffered in recent years, with funding cited by businesses as a significant factor. Incentive payments to employers will double to $8,000. Employers will receive $4,000 ($2,000 after the first 12 months of an apprenticeship and $2,000 at its completion) on top of an existing $4,000 employer incentive. There is also a total payment of $2,000 for the apprentices themselves ($1,000 after 12 months and $1,000 at the end of their apprenticeship). The Government says these measures (at a cost of $156.3m), will support up to 80,000 new apprenticeships over five years and the list of eligible occupations will be reviewed annually to reflect skills shortages.
An additional $48.3m will be put into establishing a National Skills Commission. The package is in response to an as-yet unpublished review by former New Zealand tertiary education minister Steven Joyce. A national careers institute and careers ambassador will also be introduced to help promote vocational education.
The Budget also proposes 10 "training hubs" across Australia at a cost of $50.6m over four years, focusing on training in industries that have a local skills shortage. It is designed to target youth unemployment in regional areas.
The Government will also provide $60m over three years from 2019/2020 to top up the Export Market Development Grants (EMDG) scheme (along with a further $1m in 2019/2020 for promoting Australian industry overseas). The EMDG scheme is aimed at helping SMEs to develop export markets and is a popular support program for tech companies and start-ups. The Export Market Development Grants (EMDG) program provides reimbursement for export promotion expenses for businesses with an annual turnover of less than $50m. Eligible activities include attending trade shows overseas, digital advertising, marketing consultant fees and visa fees. The scheme reimburses up to 50 per cent of eligible expenses above $5,000, with a total grant on offer of $150,000.
While this new money will be welcomed by SMEs, the Budget did not address concerns that Government grant programs are inaccessible and onerous for SMEs to apply for. Moreover, the Budget papers did not provide detail in regards to how Australian industries would be promoted overseas.
To find out more on the budget for 2019, please click here.