2021 Federal Budget Update

Understand the key takeaways from the 2021 federal budget and how it will affect your business.

What is the budget?

The Australian federal budget is prepared by the Treasurer and presented to Parliament. The budget outlines the proposed revenue and spending of the Australian Government for the upcoming financial year. The federal budget is also a political statement of the government’s intentions and priorities for the upcoming financial year and beyond.

The majority of government revenue comes from income & company tax, sales tax (GST) and interest and dividends. The government needs this revenue to pay for the public goods and services it provides including education, health, defense, infrastructure, welfare and much more.

The small business budget wish list

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Tax reform

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Skills and training

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Grants or other financial payments

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Support for women in the workforce

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Support for specific industries like manufacturing and tourism

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Incentives for hiring

What did the 2021 budget deliver?

From extensions to tax cuts. Here are the 8 key changes that affect you and your businesses.

Instant asset write off extension

It was amended during 2020 to better support business growth during the pandemic, but now the IAWO with temporary full expensing has been extended for another year. Eligible businesses with turnover of less than $5bn can write off the full value of work assets – such as a car – purchased until 30 June 2023.

Promoting women’s workforce participation

A $1.7bn subsidy overhaul for childcare will help more women get back into work. Families with two or more children will be able to claim up to 95% of costs for children aged five or younger.

New depreciation allowances

The $1.2bn expansion will allow small businesses to easily depreciate intangible assets. This measure can include assets like intellectual property and in-house software.

Extension of JobTrainer

A $1bn increase in JobTrainer expenditure to increase employment and support upskilling for 17- to 24-year-olds and the unemployed. Scheduled to expire in September, JobTrainer has now been extended for another 12 months.

Deregulation and cutting red tape

To reduce the regulatory burden on businesses, the government announced a $134.6m investment into deregulation. This will reduce red tape, lower compliance costs and ease reporting requirements.

Investments into biotech

SMEs and start-ups in the medical and biotech industry will benefit from a new $206.4m ‘patent box’. The patent box will reduce taxes on income from innovative research to encourage businesses to undertake their R&D in Australia and keep patents here.

Incentives for apprenticeships

An additional $2.7 Billion to extend the Boosting Apprenticeship Commencements program, which is expected to support more than 170,000 new apprentices and trainees by paying businesses a 50% wage subsidy over 12 months for newly commencing apprentices or trainees.

SME company tax rate cut

The company tax rate for SMEs will drop from 27.5% to 25% effective from 1 July 2021. This is down from 30% in 2014-15 and confirms cuts that were scheduled in previous budgets.

The latest resources to help you manage the budget

How to stay productive during during lockdown

How did SMEs fare in the federal budget?
Read more >

Working from home: How to stay sane indoors

Sam Allert, Reckon CEO talks the 2021 budget.
Read more >

Top 4 productivity apps for small business

What do SMEs want from more pandemic relief?
Read more >

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