After a roller-coaster year 2020, businesses are hoping for a fresh start in 2021. As the Government continues to monitor and respond to the COVID-19 pandemic

by providing SMEs with adequate measures, the Government has enlisted Small Business Accountants to support their initiatives.

In addition to the JobKeeper extended deadlines or early release of Superannuation, it has been a priority for the Government to support the backbone of the Australian economy, SMEs. 

Employers & Job building

Reducing unemployment is a national priority. While the unemployment rate is expected to decline in 2021, further rises are expected as businesses restructure in response to the pandemic. Wage growth will also be subdued with excess capacity in the market.

New analysis from the Reserve Bank of Australia suggests one in five jobs were saved by JobKeeper. The November 2020 analysis states.
“One in five employees who received Job Keeper (and, thus, remained employed) would not have remained employed during this period had it not been for the Job Keeper Payment. Given that 3½ million individuals were receiving the payment over the period from April to July 2020, this implies that Job Keeper reduced total employment losses by at least 700,000 over the same period.”

With more stringent eligibility requirements, the number of businesses accessing Job Keeper was reduced by around 450,000 in October 2020. The shift now is to create jobs, not just keeping them. To help employers grow employment and skills, a number of incentives have put in place:

  • JobMaker – For jobs created from 7 October 2020 until 6 October 2021, employers are entitled to a 12 month “hiring credit” is available. This incentive provides a payment to employers of $200 per week for eligible new employees aged between 16 and 29, and $100 per week for eligible employees aged between 30 to 35 years. Eligibility restrictions apply to the business and the employee. Employees need to have been out of work and receiving Government support for at least one month within the three months before they were hired.
  • Apprenticeship subsidies – To keep apprentices employed, subsidies of 50% of an apprentice’s wage (up to $7,000) are available for new and existing apprentices. The schemes apply to the wages of new apprentices from 5 October 2020 and 30 September 2021, and existing apprentices from 1 January 2020 to 31 March 2021. Eligibility requirements apply to the business and the apprentice.

In addition, key employers engaging apprentices in key industries with skills shortages, such as carpenters and joiners, plumbers, hairdressers, plasterers, bakers and pastry cooks, vehicle painters, wall and floor tilers, arborists, bricklayers and stonemasons and air-conditioning and refrigeration mechanics, are eligible for special subsidies.

There is also additional support for adults reskilling and undertaking an apprenticeship and for apprentices with a disability.

To see the full list of incentives click here.

  • State based incentives – Tax breaks to encourage employers to employ more workers are big right now. The Victorian government recently announced a New Jobs Tax Credit for SMEs of ten cents for every dollar of increased taxable Victorian wages. NSW has reduced payroll tax to 4.85% from 5.45% from 1 July 2020. There are also a myriad of incentives targeted to specific areas like the NSW regional growth fund. WA has an Employer Incentive Scheme with a base payment of $8,500 for employing apprentices. It’s worth seeing what is available in your region and in your industry.

Federal Government incentives generally do not overlap. That is, your business cannot receive incentives for Job Keeper and Job Maker, or Job Maker and an apprenticeship subsidy. 

First JobMaker deadline looms

6 January 2021 is the final day of the first Job Maker Hiring Credit period and the deadline for enrolling in the scheme to access payments for this period. While the ATO has the ability to extend this deadline, there has not been any advice on this to date. Enrolments are not open as yet but because of the tight turnaround times, if your business would like to access Job Maker for the first period, it will be important to assess eligibility.

For individuals, JobTrainer offers those aged between 17 and 24 the ability to upskill or reskill and minimal cost.

HomeBuilder & the housing industry

For those building or renovating a home, the HomeBuilder scheme provides a tax-free grant. To date, around 27,000 homes are expected to be covered by the scheme. The highest number of applications so far have come from Victoria (7,636), followed by Queensland with 5,954. New South Wales property prices mean that many homes exceed the eligibility threshold (4,350). 

The Home Builder scheme is extended from 1 January 2021 to 31 March 2021 has announced the Assistant Treasurer.  For all new build contracts signed between 1 January 2021 and 31 March 2021, the criteria have been revised:

  • The HomeBuilder grant for eligible owner-occupier purchasers is reduced to $15,000; and
  • The property price caps for new builds in New South Wales and Victoria will be increased to $950,000 and $850,000 respectively.

Fall eligible contracts signed on or after 4 June 2020, the construction commencement deadline will be extended from three months to six months for (applications for HomeBuilder can be submitted up to 14 April 2020).

There is also a change in the licensing requirements and registration for builders and developers:

  • For eligible contract signed on or after the 29 November 2020, the developer or builder’s licence or registration must be valid before 29 November 2020;
  • For eligible contract signed before the 29 November 2020, the developer or builder’s licence or registration must be valid before 4 June 2020.

eligibility criteria to access HomeBuilder remains the same. To be eligible you need to be an individual owner occupier, 18 years of age or more, an Australian citizen, and pass the income test. The income test for individuals is $125,000 and $200,000 for couples (based on your 2018-19 or later tax return).

The grants are available if you build a new home where the value of the house and land does not exceed the threshold ($750,000 to $950,000 depending on when the contract was signed and the State you live in), or a renovation where the value of the property is $1.5m or less.

Extended rules for writing off assets: Australian subsidiaries of global companies to benefit

In the 2020-21 Federal Budget, the Government introduced a measure that allows businesses with turnover under $5bn* to immediately deduct the cost of new depreciable assets and the cost of improvements to existing assets in the first year of use. This means that an asset’s cost will be fully deductible in the year it’s installed ready for use, rather than being claimed over the asset’s life. And, there is no cap on the cost of the asset. 

Last month the Government announced it will modify the rules again enabling a broader range of businesses to access the instant write-off.

The amended rules will enable businesses with an aggregated annual turnover of $5bn or more (the current maximum threshold) to access the measures if they can satisfy an alternative test. Entities are able to pass this test if they have:

  • Less than $5 billion in total statutory and ordinary income in either the 2019 or 2020 income year; and
  • Incurred more than $100 million in expenditure on tangible depreciating assets between the 2017 and 2019 income years.

This will allow some Australian businesses that are connected with large global groups to access the measure.

In addition, the Government will enable businesses to opt-out of using the new instant asset write-off and accelerated depreciation rules on an asset by asset basis. Currently, the rules apply automatically if certain conditions are met, which for some businesses is not an effective use of the deduction. However, at this stage, it appears the choice to opt out of the instant asset write-off might not be available to small business entities that choose to apply the simplified depreciation rules. 

*Aggregated turnover. Aggregated turnover is your turnover plus the annual turnover of any business connected with you or that is your affiliate.

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