Small Business Tax Breaks: Budget Measures on which we can all agree (apparently)

No matter what the outcome of the May 18th Federal Election, there are a few things that are certain. The world will continue to turn, for instance, and for small and medium businesses, there will be taxation concessions, in the form of extended instant-asset write-offs and improved support for taking on apprentices, as small businesses continue their role as the engine room of employment opportunities and economic growth in Australia.

These are the certainties because both the Morrison Government’s budget speech and the Shorten Opposition’s responses support the same initiatives.

Instant asset tax deduction (not a cash hand out)

The limit or threshold of the instant-asset write-offs will be expanded to $30,000 until 30th June 2020 and the cap for business participation will rise from $10 million to $50 million. This means around 22,000 additional businesses will be eligible for the write-off.

So, businesses with a turnover up to $50 million will be able to buy assets valued up to $30,000 and write that off immediately (against their taxation liability in the year the asset was purchased).

That is good news, but it requires the business making the acquisition having two things:

a. money to buy the asset in the first place

b. taxable profits against which the full depreciation can be written off in the year of purchase.

For many small businesses, one may be achievable, while the other may not. This is not a handout of the cost of the asset, or some portion of it. It is simply bringing forward the tax deduction for the depreciating value of the asset into a single financial year, rather than being spread over a number of years. Getting business specific advice is always necessary in these sometimes-complex areas.

Skills & Training

Other areas on which there is a level of agreement between the major parties – arising from the Federal Budget which was itself brought forward to take into account the election – include skills and training.

Labor and the Liberal/National Coalition agree that more needs to be done to support young people to gain jobs, and both emphasise training and work opportunities being key to that. But, we need to stress here that their policy approach is a little different.

The Coalition promises 80,000 new apprentices in a $525 million program aimed at arresting the now seven year-long collapse in apprenticeship commencements.

Labor’s approach supports 150,000 new apprentices and will reportedly cost around $1 billion over the medium term, with $2,000 available to assist a new apprentice with their education costs.

There is bipartisan support for an increase to up to $8,000 of placement funding for employers who engage apprentices.

It is important to be clear here. For some time now, the definition of ‘apprentice’ has been watered down by political misuse. The parties are talking about funded training places linked to work, not just traditional four-year trades apprenticeships.

Accessing Older Workers

For those thinking of engaging with older workers, the Federal Budget includes a Skills and Training Incentive of $2,000 matched to self-funding or business funding. Career Transition Assistance will also be available for older Australians. Labor’s approach proposes to make 20,000 Advanced Adult Apprenticeships available.

Where To From Here?

The Federal Election is the important moment on the horizon. No matter that the world will keep turning, it will turn slightly differently, regardless of which major party forms Government.

It is difficult to find consensus, but look through the areas where there is consensus, and you see some expenditure measures that are designed to prime the pump in what is an Australian economy that is struggling to find its next turn of growth.

There seems to be consensus on that, at least, though no one wants to say so!

Tim Woods is Managing Director of IndustryEdge, the leading trade and market analysts for wood products and the timber industry in Australia. Go to where there is plenty of freely available market analysis and information.