2019-20 Federal Budget Report: Small & Medium Business

The Government continues to back small and medium business to encourage growth and job creation by delivering investment incentives, fast tracked company tax cuts and solutions to reduce the cost of doing business.


What was announced

  • Increasing access to the instant asset write-off
  • Fast tracking lower tax rates
  • Supporting Australian Exports
  • Increased refunds of Luxury car tax
  • Apprenticeship incentives
  • Reducing the cost of doing business

Increasing access to the instant asset write-off

Effective from Budget night, the Government is increasing and expanding access to the instant asset write‑off until 30 June 2020.

The instant asset write‑off threshold will increase from $25,000 to $30,000. This applies on a per asset basis, so eligible businesses can instantly write-off multiple assets.

These changes interact with the previous announcement by the Government on 29 January 2019 to increase the instant asset write-off threshold from $20,000 to $25,000. This means that small businesses (with aggregated annual turnover of up to $10 million) may immediately deduct eligible assets costing less than $25,000 that are first used, or installed ready for use, from 29 January 2019 until Budget night.

Small and medium businesses (with aggregated annual turnover of up to $50 million) will be able to immediately deduct eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.

Small businesses can continue to place assets which cannot immediately be deducted into a small business simplified depreciation pool, to be depreciated at 15% in the first year and 30% each year thereafter. Any pool balance that falls below the instant asset write-off threshold by the end of the income year may be written off in full in that year.

Lowering the company tax rate

The Government has fast-tracked measures to lower the tax rates for small and medium sized companies with turnovers below $50 million.

Small and medium sized companies currently facing a 27.5% tax rate will have a 25% tax rate by 2021‑22, which is 5 years earlier than previously planned. This compares to the standard company tax rate of 30%.

Supporting Australian Exports

The Government will provide $61 million over 3 years from 1 July 2019 to support small and medium businesses to export Australian goods and services to overseas markets, including:

•     $60 million over 3 years for the Export Market Development Grants scheme to boost reimbursement levels of eligible export marketing expenditure; and

•     $1 million to further promote Australian export industries to overseas markets.

Increased refunds of Luxury car tax

The Government will provide further relief to farmers and tourism operators by amending the luxury car tax refund arrangements.

For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000.
Currently, primary producers and tourism operators are only eligible for a partial refund of the luxury car tax paid on eligible four‑wheel or all‑wheel drive cars, up to a maximum refund of $3,000.

Apprenticeship incentives

The Government will support the creation of 80,000 new apprenticeships in industries with skills shortages and will double incentive payments to employers to $8,000 per placement.

These new apprentices, including bakers, bricklayers, carpenters and plumbers, will also receive a $2,000 incentive payment.

Reducing the cost of doing business

The Government is reducing the cost of doing business by:

  • Making it easier, cheaper and quicker for small businesses to resolve tax disputes
    • Creating a dedicated Small Business Taxation Division within the Administrative Appeals Tribunal with dedicated case managers, a lower application fee and fast-tracked decisions;
    • Requiring the ATO to pay reasonable legal costs for the small business in certain circumstances when they challenge ATO decisions; and
    • Establishing a small business concierge service within the Australian Small Business and Family Enterprise Ombudsman’s office to provide advice and support.
  • Improving access to advice
    • Establishing 10 tax clinics across metropolitan and regional Australia, as a 12 month pilot, providing access to free advice to assist unrepresented small businesses and individuals on tax issues. 
  • Improving access to finance
    • Establishing the $2 billion Australian Business Securitisation Fund, which will enhance small businesses’ access to finance.
  • Cutting red tape
    • Streamlining GST reporting by reducing the number of GST questions on business activity statements;
    • Reducing financial reporting and audit costs for businesses currently subject to reporting obligations ; and
    • Simplifying and expanding the current regulatory regime for employee share schemes, reducing the time and cost burden for small businesses.