The 2016 budget announced in early May saw good news for many tradies, especially the self-employed, as the Treasurer announced tax cuts for business, increased the eligibility of the instant asset tax write-off scheme and offered a cash incentive to take on unemployed young people as interns.
Greater measures to improve confidence in the Australian economy include a renewed pledge to spend $50 billion on infrastructure projects over the next four years.
10 year tax cuts
The company tax rate for small businesses with an annual turnover of less than $2 million was already reduced from 30 per cent to 28.5 per cent at the start of the 2015-16 Financial Year.
The Liberal’s budget further reduces that to 27.5 per cent in 2016-17 and expands eligibility requirements to include businesses with a turnover of up $10 million dollars.
The eligibility threshold will continue to rise to $100 million annual turnover by the 2019-20 Financial Year, while the company tax rate will be reduced further to 25 percent by 2026 if the Turnbull Government continues.
Expanded instant asset write-off
As a further incentive to spend in the short term, the treasury has expanded the $20,000 instant asset-write off with the eligibility threshold increased to include businesses with an annual turnover of $10 million and under.
The scheme allows businesses to immediately claim back the taxes paid on the purchase of assets up to the value of $20,000, however this value will be reduced to $1,000 after June 30, 2017 so tradies should take advantage of it quickly.
Treasury data shows almost 100,000 businesses claimed back $418.5 million under the write-off scheme between July and December 2015 – around $4,225 per company.
Small Business Minister Kelly O’Dwyer said that extending eligibility “will help more small businesses to reinvest in their business and grow by helping them to replace or upgrade their machinery and equipment.”
PaTH (Prepare – Hire – Trial) Internship Scheme
Employers are being encouraged to try out potential workers under a $752 million youth employment initiative called PaTH: Prepare – Trial – Hire.
People under 25 years old who have been on unemployment benefits for over six months will be offered pre-employment skills training through jobactive before having the opportunity to start a 4-12 week internship.
Interns will receive $200 per fortnight in addition to their existing income support payment, while employers will benefit from an upfront payment of $1,000.
Youth Bonus wage subsidies will be available from 1 January 2017 for employers who subsequently employ a young job seeker who has been in employment services for six months or more.
With the current high dropout rate in apprenticeship programmes, the Master Builders Australia says this scheme will make it easier for building trade companies to find the right apprentice for the available jobs.
Existing apprenticeship programmes will work in parallel with the PaTH scheme.
Unions have warned that employers may simply replace a full time worker with ongoing free interns, exploiting young people who will be earning below minimum wage while on the scheme.
The Minister for Employment Michaelia Cash said her department would monitor the program to ensure employers treat young people fairly.