The Australian Government has announced 2021 budget business tax incentives it says will help create jobs and secure Australia’s COVID-19 recovery. According to the government, small and medium businesses will receive tax cuts of more than $16 billion by 2023-24. This includes reducing the tax rate for small and medium companies to 25 per cent from 1 July 2021.
The government says it is also supporting business investment by extending temporary full expensing and temporary loss carry-back for an additional year, enabling businesses experiencing COVID‑19 related supply disruptions, or considering investing in projects requiring longer planning times, to take advantage of the incentives.
Combined, the Australian government estimates the 2021 extension of these two measures will deliver an additional $20.7 billion in tax relief to business entities over the forward estimates period. An estimated $320 billion worth of investment is expected to be supported by these incentives.
According to the government, the temporary full expensing and temporary loss carry-back measures are also estimated to boost GDP by around $2.5 billion in 2020‑21, $7.5 billion in 2021‑22 and $8 billion in 2022‑23, as well as creating around 60,000 jobs by the end of 2022‑23.
“The government’s business tax incentives are working,” the government said in a statement. “In the December quarter, investment in machinery and equipment increased at the fastest quarterly rate in nearly seven years, as firms took advantage of the government’s tax incentives. Firms’ capital investment intentions for 2020‑21 have also strengthened.
“This will boost activity and employment in the short run and raise the productive capacity of the economy for the future.”