Federal Budget 2020 - All the Useful Info for Breweries:
Boosting Apprentice Wage subsidy
For those of you who have growing businesses there are some great incentives to hire an apprentice. The Boosting Apprenticeship wages subsidy is for any new apprentice you hire after October 5 2020. This can be a first-year brand-new apprentice or an apprentice you take on who is midway through an apprenticeship. The subsidy is 50% of the gross wages paid from October 5 2020 to September 30 2021, up to a maximum of $7,000 per quarter. The amounts will be paid at the end of each quarter via your apprenticeship provider.
It’s important to note this scheme will be limited to the 1st 100,000 Apprentices.
On top of this we still have the Supporting Apprentices & Trainees program that commenced in March 2020. For those of you with Apprentices at 1 July 2020 who are no longer receiving JobKeeper payments will go back to the 50% wage subsidy up to $7,000 per quarter per apprentice. This will be paid at the end of each quarter and is available until March 2021.
Designed to move young Australians from JobSeeker into the workforce, the JobMaker hiring credit is for eligible employees between 16-35 years of age, employed after the October 7 2020 and before October 6 2021.
The credit will be:
• $200 per week for employees aged 16 to 29
• $100 per week for employees aged 30 to 35
• Your business can’t be on JobKeeper
• The position must be an ‘additional’ position created in your business. Your headcount needs to increase (this is based on your headcount at 30th September 2020) along with your payroll amount
• Employee needs to work a minimum of 20 hours per week each quarter
• The employee must have received JobSeeker, Youth Allowance or Parenting Payment in at least one of the three months prior to their employment
• This will be available for each new job created from October 7 2020 and before October 6 2021
• You need to have an ABN, be up to date with tax lodgements, be registered for PAYG withholding and report via Single Touch Payroll
Full Expensing of Assets
Assets purchased from 7.30pm October 6 2020 to 30 June 2022 will be able to be claimed as a tax deduction, in full, in the year they are ‘installed’.
This ‘full expensing’ applies to 'new' depreciable assets and the cost of improvements to existing eligible assets. For businesses with a turnover of less than $50 million the ‘full expensing’ also applies to second-hand assets.
For any assets already purchased between July 1 2020 and October 6 2020, if the cost is less than $150,000 and the asset is installed ready for use before June 30 2021 you will still be able to claim in full. Small businesses with a turnover less than $10 million can also deduct the balance of any simplified depreciation pools at the end of the year, while the full expensing rules apply.
What this means in practice is: assume you are a manufacturer who purchases a new piece of machinery that costs $300,000. Assuming you are making a profit and trade as a company, you would save $78,000 in tax in this current financial year.
Instead of the proposed cuts to R&D tax incentive, we are now looking at an additional $2 billion being added to the program.
For those with a turnover of less than $20 million, the R&D tax offset is 18.5% on top of the Company Tax Rate. This will start from July 1 2021. There will be no cap on the refund amount, which is great news
Loss Carry-Back for Companies
If you normally make a loss in your business, this ‘loss’ gets carried forward to future years for you to offset against future profits. These new rules allow you to ‘carry-back’ these losses; effectively giving you a refund of prior tax paid.
Losses that you incur in FY20, FY21 or FY22 will be able to be carried back against profits made in or after the FY19. These tax refunds will be able to be claimed when lodging your FY21 Income Tax Return. It’s important to note that the carry-back amount can’t exceed the prior year profits and can’t put the franking account into deficit.
Modern Manufacturing Strategy
$1.5 billion to be spent over the next five years to improve competitiveness, scale and resilience in Australian manufacturing. The focus will be on six key areas, but the important one for us is Food and Beverage.
Modern Manufacturing Initiative
$1.3 billion co-funding for large manufacturing projects. Grants will open in the 1st quarter of next year.
Manufacturing Modernisation Fund
$52.8 million for a second round of this fund which gives grants to support transformational technologies and processes.
Another important aspect of the Government’s job plan is the JobTrainer initiative. This is designed to assist businesses to train or retrain people into new areas of employment. This is part of the $2b skills package and we will update this area as more details are revealed.
$18 billion has been earmarked for a technology investment roadmap which prioritises renewables, storage, and carbon capture. The policy includes $95.4 million for a new technology co-investment fund to support businesses in agriculture, manufacturing, industrial and transport sectors to adapt technologies to increase productivity and reduce emissions.
Mental Health Support
Mental health received another important boost last night, with the Government announcing another 10 Medicare funded mental health sessions with a psychologist, bringing the yearly total to 20. (20 bulk billed psychology sessions, without being out of pocket in a year).
Another important aspect of the Government’s job plan is the Job Trainer initiative. This is designed to assist businesses to train or retrain people into new areas of employment. This is part of the $2b skills package and we will update this area as more details are revealed.
For Individuals: Tax Refunds/Rate Changes
Last year's budget announced a three-phase personal income tax plan. Phase 1 was introduced last year. Phase 2 is being fast tracked to start on July 1 2020
• The top threshold of the 19% bracket moves from $37,000 to $45,000
• The top threshold of the 32.5% bracket moves from $90,000 to $120,000
• The Low and Middle Income Tax Offset will be retained for 2021