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Federal Budget 2021/22: Key Takeaways for Small Businesses

As a small business owner, it’s worth paying attention to the Federal Budget. The announcements that come with it – whether small or significant – can directly impact your business, and set the tone for the year ahead. The 2021-22 budget, which was delivered in May, by Treasurer Josh Frydenberg, includes a range of support for small business owners and employers, and has been received quite positively by the business community since its announcement.

The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, said the new budget was a “clear acknowledgement that small and family businesses are central to the nation’s economic recovery and future prosperity.” Read on for some of the key points impacting small businesses.

1. Tax cuts

Small businesses will have less tax to pay! The budget includes a drop in the corporate tax rate for small to medium-sized enterprises (SMEs) from 27.5% to 25%.

2. Deregulation

The Government are pushing ahead with their deregulation agenda, with plans to spend $134.6 million over four years to make it easier for businesses to employ people – without needing to interact with the government in regard to regulatory matters.

3. Digital economy strategy

Another focus of the Government in the near future will be its Digital Economy Strategy. They’re pouring $1.2 billion into it over six years, and it will mean that SMEs will be driven to adopt and use transformative artificial intelligence technologies, through the creation of a $53.8 million National AI Centre and four AI and Digital Capability Centres. Also impacting SMEs will be $12.7 million of spending towards the Australian Small Business Advisory Service Digital Solutions program, which will expand to reach up to 17,000 small businesses.

4. Investment tax incentive

Remember the investment tax incentive announced in last year’s budget? It’s back, and has been extended for a further year until 30 June 2023. This means, if your business has a turnover of less than $5 billion, you’ll be able to deduct the full cost of any eligible asset you purchase for your business, as well as the cost of any improvements to existing assets.

5. Temporary tax loss carry-back provision

If your small business has any tax losses, the budget now allows you to carry back tax losses for an extra year – from the 2019-20, 2020-21, 2021-22 and now 2022-23 income years (which means you can offset the previously taxed profits from 2018-2019 or later income years).

6. Extension of loan scheme for small business

If your business has a turnover of up to $250 million, and were either recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021 or were affected by the floods in eligible Local Government Areas in March 2021, the SME Recovery Loan Scheme will be extended to apply to you. This means that you’ll be able to access an increased government guarantee of 80%, plus a higher maximum loan size of $5 million and a maximum loan term of 10 years – with interest rates capped at around 7.5%.

Read the full Federal Budget breakdown for yourself at Budget.gov.au.

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