Budget 2020: Fringe benefits tax exemptions and red tape cuts on the way
The federal government will use next week’s budget to introduce a raft of tax concessions, including fringe benefits tax exemptions.
The federal government will use next week’s budget to introduce a raft of tax concessions for SMEs, in a move it says will allow more businesses to stay open and retain staff.
The budget will include a $112 million package that will change the fringe benefits tax (FBT) treatment of employee training, as well as give a larger number of businesses access to 10 different tax concessions, according to The New Daily.
From today, businesses will be exempt from paying the 47% FBT on retraining provided to employees who have been made redundant, or would soon be made redundant, so they can be given a new role in the business.
The government will also increase the small business entity turnover threshold from $10 million to $50 million, which will give eligible businesses access to small business tax concessions in a number of stages.
The threshold was previously set at $2 million, but was increased to $10 million in 2016, effectively changing the government’s operating definition of a small business.
The latest change means that from July 1 this year, eligible businesses will be able to immediately deduct specified start-up expenses and some prepaid expenditure.
These same businesses will be exempt from paying FBT on free car parking provided to employees in non-commercial car parks.
Similarly, an FBT exemption will also apply to businesses that provide phones, laptops and other work devices to employees.
These changes will commence on April 1, 2021.
From July 1, 2021, eligible businesses will be given access to simplified trading stock rules and be allowed to remit pay-as-you-go instalments based on GDP-adjusted notional tax.
The package will also change regulations in other areas, including by allowing brewers and distillers to report and pay excise on a monthly basis, rather than weekly, to help with managing cashflow.
Additionally, the government will also seek to reduce the timeframe for amendments to tax returns, from four years to two years, which it says will give business operators more peace of mind in relation to when the Australian Tax Office may seek to amend their tax returns.
“We know that the pathway to recovery is not through higher taxes but through a more competitive and efficient tax system that supports jobs and promotes investment,” said Treasurer Josh Frydenberg about the changes.
“Enabling small businesses to keep more of what they earn means they can keep operating, pay their bills and retain or hire more staff.”
Speaking to SmartCompany, MYOB chief executive Greg Ellis said the FBT concessions will have a “direct and immediate impact for small business owners”.
“In addition to providing a direct tax break, the FBT concessions for work-related portable electronics will stimulate more spending on necessary items for modern workplaces, including phones and laptops, which are crucial in aiding the necessary digitisation of our small business economy,” Ellis says.
Ellis described the suite of measures as a “good, practical step” by the government and “another positive sign” for the upcoming budget, but said MYOB would “like to see this simplification of the tax system go further”.
“There’s a lot riding on this budget for Australia’s three million small and medium business owners, and our data shows that 85% of Australians want to see SMEs prioritised,” Ellis adds.
“Next week’s budget is another change for government to show their strong commitment to small business and to give small business owners the confidence to invest and to create more jobs as the economy begins to recover.”
NOW READ: Scott Morrison announces $1.5 billion manufacturing plan with a focus on these six sectors
Comments