Business groups have welcomed the Morrison government’s commitment to provide tax breaks in a bid to kickstart the coronavirus-hit economy.
But small business operators say more should be done to assist them.
More than 99 per cent of businesses will be able to write off the full value of eligible assets in a multi-billion dollar budget measure.
Treasurer Josh Frydenberg said the temporary tax incentive announced in Tuesday’s budget would “expand the productive capacity of the nation and create tens of thousands of jobs”.
The budget plan will benefit about 3.5 million small, medium and large businesses with a turnover of up to $5 billion until June 2022, and is aimed at providing an incentive to bring forward investments.
The government said the measure would deliver $26.7 billion in tax relief over four years for businesses that employ about 11.5 million workers.
The measure is one of a number offering billions of dollars in tax breaks to boost businesses and help recover from the COVID-19-led recession.
The treasurer also unveiled a temporary measure allowing businesses to reclaim tax paid in previous years to offset losses incurred because of the coronavirus pandemic.
The temporary loss ‘carry back’ will allow companies with a turnover of up to $5 billion to offset losses incurred to 2022 against profits made in or after the 2018/19 financial year.
The government said the offset proposal will provide $4.9 billion in tax relief over four years.
The government had already unveiled a dozen changes to fringe benefits tax in the lead up to the budget for small and medium-sized businesses.
Australian Industry Group chief Innes Willox said the investment allowance would be critical.
“Without this measure the anticipated fall in non-mining business investment of 14.5 per cent in 2020/21 would be much greater and the measure is a significant factor in the anticipated rise of 7.5 per cent in non-mining business investment in the 2021/22 year,” he said.
The tax loss carry-back measure would allow many to stay in business, he said.
Business Council chief Jennifer Westacott said the budget recognised business will do the heavy lifting when it comes to the recovery.
“This budget turns the corner from support to recovery and growth. It rightly puts the incentives back with the private sector to reopen, grow and employ more people,” she said.
Council of Small Business chief Peter Strong said while the tax breaks were welcome, the government also needed to put employment services into local communities to help the jobless.
“There could be between 300,000 and 600,000 people who have never experienced being unemployed before – we need to let them know that there is support and it is ongoing,” he said.
As well, small businesses required ongoing rent assistance, he said.