EXPANDING ACCESS TO SMALL BUSINESS TAX CONCESSIONS TO SUPPORT JOBS

Senator the Hon Michaelia Cash
Minister for Employment, Skills, Small and Family Business
Senator for Western Australia

2 October 2020

WEEKLY WRAP

EXPANDING ACCESS TO SMALL BUSINESS TAX CONCESSIONS TO SUPPORT JOBS

The Morrison Government is continuing to support small businesses in the recovery from COVID-19. The Government is providing $105 million in tax concessions to attract and retain workers and reduce red tape.

For the first time, businesses with an aggregated annual turnover between $10 million and $50 million will have access to up to ten small business tax concessions. The changes are estimated to support an additional 20,000 businesses and their employees.

The expanded concessions, as part of the 2020-21 Budget will apply in three phases:

• From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
• From 1 April 2021, eligible businesses will be exempt from the 47 per cent fringe benefits tax on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.
• From 1 July 2021, eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods. Eligible businesses will also have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.

In addition, from 1 July 2021, the Commissioner of Taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50 million aggregated annual turnover threshold.

This announcement builds on the extensive support provided for small and medium-sized businesses during the COVID-19 crisis that has included JobKeeper, extending the Instant Asset Write Off, providing a Cash Flow Boost of up to $100,000 for employing small businesses, and boosting access to capital through our COVID-19 SME loan Guarantee Scheme.

Small business is the backbone of our economy. The Morrison Government will continue to support our small and medium-sized businesses as part of our economic recovery plan.    

FBT EXEMPTION FOR EMPLOYER-PROVIDED RETRAINING AND RESKILLING

I am pleased to advise that the Government will provide an exemption from Fringe Benefits Tax (FBT) for employer-provided retraining and reskilling, for employees who are redeployed to a different role in the business. The exemption will apply from 2 October 2020.

Removing costly barriers to training as the economy rebuilds is essential to ensure Australian employees have the opportunity to reskill or retrain for the jobs that will come back as the economy reopens.

Currently, FBT is payable if an employer provides training to its employees that is not sufficiently connected to their current employment. For example, a business that retrains their sales assistant in web design to redeploy them to an online marketing role in the business can get hit with FBT. By removing FBT, employers will be encouraged to help workers transition to new employment opportunities within or outside their business.

The exemption will not extend to retraining acquired by way of a salary packaging arrangement or training provided through Commonwealth supported places at universities, which already receive a benefit.

In addition, the Government will consult on potential changes to the current arrangements for workers that undertake training at their own expense. The current rules, which limit deductions to training related to current employment, may act as a disincentive for Australians to retrain and reskill to support their future employment needs.

These changes will provide further support for training, building on our $1 billion JobTrainer program which will provide up to an additional 340,700 training places across the country for school leavers as well as provide opportunities for job seekers to upskill and reskill and get back to work as quickly as possible.

The Government will continue to help businesses and their employees to successfully adapt so that they can bounce back on the other side of this crisis.

TRANSFORMING AUSTRALIAN MANUFACTURING TO REBUILD OUR ECONOMY 

As part of our JobMaker plan, the Morrison Government is launching a new era of Australian manufacturing to rebuild the economy, create jobs and recover from the COVID-19 recession. 

The Government is investing $1.5 billion in new funding, over the next four years in the Modern Manufacturing Strategy to make Australian manufacturers more competitive, resilient and able to scale-up to take on the world. 

The centerpiece of the Strategy is the $1.3 billion Modern Manufacturing Initiative (MMI), which will see the Government strategically invest in projects that help manufacturers to scale up and create jobs.

The MMI will support projects within six National Manufacturing Priorities which reflect Australia’s established competitive advantages or emerging areas of priority:

• Resources technology and critical minerals processing;
• Food and beverage;
• Medical products;
• Recycling and clean energy;
• Defence; and
• Space.

Industry will be engaged to co-design tailored road maps for each of the priority sectors to set clear goals over the next two, five and 10 years, and identify the barriers and opportunities that will guide action and investment.

The Strategy will also address the competitiveness of individual manufacturers in our priority sectors, with a $52.8 million expansion of the Manufacturing Modernisation Fund.

The COVID-19 crisis has also highlighted the need to better understand and address our supply chain issues and opportunities. A $107.2 million Supply Chain Resilience Initiative will support projects that address an identified supply chain vulnerability.

Innovation and Science Australia will be repurposed as Industry Innovation and Science Australia, to provide a long-term perspective on growing the manufacturing sector and strong industry advice to Government throughout the implementation of the Strategy.

The Government is also comprehensively reviewing existing industry programs to better align them with the strategy. As part of this, we will provide an additional $50 million to the Industry Growth Centres initiative to support projects in the priority areas out until the end of June 2022.

This strategy builds on the work across Government to improve economic conditions for business, including streamlining regulation, cutting red tape and cutting input costs. A key part of that will be cutting energy costs as outlined in the Gas-fired recovery statement on 15 September 2020.

Regards

Senator the Hon Michaelia Cash
Minister for Employment, Skills, Small and Family BusinessSenator for Western Australia