The Federal Treasurer provided an update on the economic and fiscal outlook on 23rd July 2020.
There were no surprises that the global pandemic had a significant effect on the economy with Treasurer Josh Frydenberg confirming in the ‘mini budget’ that the figures put Australia in a recession and the worst economic downturn since the Great Depression.
The estimated 2020-2021 bottom line will fall from a $6.1 billion surplus to a $184.5 billion however Australia has “outperformed nearly every other country in both health and economic outcomes through this crisis” according to Frydenberg.
We share the highlights of the mini budget that may affect you and your business below:
The government’s economic response to coronavirus has been aimed at reducing the number of job losses in Australia. The jobless rate in June was 7.4 per cent and is anticipated to peak at around 9.25% in the December quarter. With the extension of the JobKeeper program beyond September the aim is to keep people employed by directing funds to businesses who still need assistance.
From 28th September, recipients of the JobKeeper payment will need to re-test their eligibility and there will no longer be a flat rate for all employees paid under the scheme. There will be a two tier system that will depend on the number of hours worked in February 2020, and the pay rates will decrease in two stages until the end of the program in March 2021. You can read more about JobKeeper 2.0 here.
Instant Asset Write-Off
The instant asset write-off threshold of $150,000 will be extended until 31st December 2020. So if your business has purchased an asset up to the value of $150,000 between 12th March and 31st December, then you can claim an immediate deduction for the business portion of the cost of the asset in that financial year.
Assets > $150,000
If your business purchases an asset costing greater than $150,000 you will be able to claim a 50% immediate deduction (with the balance able to be depreciated) if the asset is ready for use by 30th June 2021.
Small Business Loan
The government backed small business COVID-19 loan scheme has been extended until June 2021. From 1st October the loans can be provided for purposes other than working capital, the maximum loan size will be increasing four-fold to $1 million with repayment terms extended from 3 years to 5 years.
The Federal Government also announced an extension to the JobSeeker benefit. The program will reintroduce obligations for the payment recipient to seek work, and there are further restrictions to eligibility. Payment rates will reduce to $800 per fortnight until the 31st December 2020 with means testing being reintroduced from 25th September. From 4th August those seeking employment will need to undertake four job searches a month and penalties will apply if people refuse a job that has been provided and offered through that process.