This year’s Federal Budget focused on post-recession economic growth through tax incentives, business support packages, job creation mechanisms and project expenditure. Whilst the government’s budget was light on in specific tourism or manufacturing related funding, we are pleased to see announcements regarding insurance support in northern Australia, an extension to the Building Better Region Fund and employment support for tourism operators for which we have strongly lobbied on over the past 12 months.
We provide the following overview of the key announcements of relevance to our industry.
Temporary Full Expensing
Temporary full expensing will now be available until 30 June 2023. Temporary full expensing allows eligible businesses with aggregated annual turnover or total income of up to $5 billion to deduct the full cost of eligible depreciable assets. Assets must be acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
The 12-month extension will provide eligible businesses with more time to access the incentive, including projects that require longer planning times and those affected by COVID-19 related supply disruptions.
Temporary Loss Carry-Back Extension
Temporary loss carry-back will also be extended by one year. This will allow eligible companies to carry-back tax losses from the 2022-23 income year to offset previously taxed profits as far back as the 2018-19 income year. Companies with aggregated annual turnover of up to $5 billion can apply tax losses incurred during the 2019-20, 2020-21, 2021-22 and now the 2022-23 income years to offset tax paid in 2018-19 or later years. The tax refund will be available to companies when they lodge their 2020-21, 2021-22 and now 2022-23 tax returns.
Further Information: https://budget.gov.au/2021-22/content/factsheets/download/factsheet_tax.pdf
Building Better Regions Fund
An additional round (Round 6) of the long-standing fund that is designed to improve economic growth and build stronger regional communities with a total pool of $256.5 million over 5 years to support investment in community infrastructure and capacity building projects in regional areas. This funding program will be ideal for caravan parks and regional businesses looking to undertake CapEx projects.
Downsizer Superannuation Contribution
The Government is reducing the minimum age of the downsizer superannuation contribution so those who want to downsize can do so sooner. From 1 July 2022, the minimum age will be lowered from 65 to 60. This will allow Australians nearing retirement to make a post-tax contribution of up to $300,000 per person when they sell their family home and help to free up larger homes for younger families. This incentive will be ideal for Australians looking to downsize into caravan parks and land lease sector.
Further Information: https://budget.gov.au/2021-22/content/factsheets/download/factsheet_super.pdf
Northern Australian Insurance Affordability
The government has announced the establishment of a reinsurance pool to support small businesses to access property insurance in cyclone-prone areas through the establishment of a reinsurance pool backed by a $10 billion government guarantee. This is a positive outcome for operators north of the Tropic of Capricorn and whilst it does not address natural disasters insurance issues in southern Australia, it provides a test model for further expansion.
SME Recovery Loan Scheme
The Australian Government is providing continuing support to SMEs through the SME Recovery Loan Scheme. This support will assist firms that received JobKeeper in the March quarter 2021 and firms that are eligible flood-affected businesses. By enhancing lenders’ ability to provide cheaper credit, the Scheme will assist SMEs access to vital funding to recover and invest for the future
Student Visa Working Hours Amendment
The Federal Government has announced that it will remove existing work hour limits for student visa holders who are employed in the tourism and hospitality sectors. Currently, international students are restricted to work 40 hours each week during study periods.
- Government will deliver an additional $7.8 billion in tax cuts by retaining the low and middle income tax offset (LMITO) in 2021-22.
- Small and Medium Enterprise (SME) digitalisation funding:
- $15.3 million over three years from 2021-22 to promote and accelerate the adoption of e-invoicing by businesses.
- $0.9 million over five years from 2020-21 to continue the Ahead for Business digital hub, supporting small business owners to take proactive, preventive and early steps to improve their mental health.
- The Government will provide $9.9 million over five years from 2020-21 (and $1.2 million per year ongoing) to the Australian Competition and Consumer Commission to support the implementation of the Mandatory Motor Vehicle Service and Repair Scheme