On Tuesday night Josh Frydenberg delivered the Australian Federal budget for 2021-2022. While there were obvious funding front-runners, such as the COVID-19 vaccine and aged care, what were the outcomes for Australia’s small and medium businesses?

Areas such as small breweries, video games and biotech start-ups gained considerable support, while other industries also received a few bonuses.

Big tax breaks for small brewers and distillers

Small, boutique brewers and distillers will benefit from tax breaks, in a bid to encourage more investment in the sector. At the moment, they can claim a 60 per cent refund on the excise they pay, which includes up to $100,000 annually. Under the new rules small, boutique brewers and distillers will be able to claim a full refund on their excise, with limits up to $350,000 per year. This incentive aims to triple the amount brewers and distillers can sell before excise tax applies.

Business asset write-offs

During his budget speech, Treasurer Frydenberg stated, “Over 99 per cent of businesses, employing over 11 million workers, can write off the full value of any eligible asset they purchase. This has seen their spending on machinery and equipment increase at the fastest rate in nearly seven years.”

Business asset write-offs were introduced in last year’s budget and will continue until 30th June 2023. Businesses with a turnover of up to $5 billion will be able to write off the full value of any eligible asset, such as equipment and vehicles, bought between the last budget and the end of the financial year 2023. This also extends to any losses up to June 2023, which can be offset against profits dating back to the 2018-2019 financial year.

Extension to the Small and Medium Enterprise (SME) Loan Scheme

There will be an extension to the SME loan scheme, which has already helped more than 45,000 businesses access low‑cost finance.

The Government will provide a guarantee of 50 per cent to participating lenders to support new loans to SMEs. This means businesses can access affordable funding, which in turn means the lenders can provide lower interest rates.

The Government has extended the scheme to help businesses recover and provide continued support for those businesses facing the ongoing impacts of the Coronavirus.

Tax Cuts for Small and Medium Enterprises

There will be more than $16 billion in tax cuts for small and medium enterprises by 2023-24 with around $1.5 billion flowing in 2019‑20. This includes reducing the tax rate for small and medium companies, from 30 per cent in 2014‑15 to 25 per cent from 1 July 2021.

After a year filled with uncertainty, the Government has acknowledged that SMEs have been hit hardest by the pandemic, by addressing these issues accordingly with tax cuts, asset write-offs and extensions to loan schemes for SMEs.

For the full details of the 2021 Australian Federal Budget, please visit the Treasury website for more details.