Tonight, Scott Morison (treasurer) delivered the 'jobs and growth' budget which will assist Australia transition into an innovative, ideas-rich nation which is in full support of hard-working families and SMEs in Australia. This is how The Budget will affect your business:
Creating a new pathway to youth employment
Helping young people through Australia’s economic transition.
More than 50,000 youth jobs were created over the past 18 months. The $840 million Youth Employment Package steps this up with an enterprising new approach to youth employment, and will help up to 120,000 vulnerable young people over four years take advantage of job opportunities as the economy diversifies and transitions to broader‑based growth.
Long-term welfare dependency is not good for the economy or society. For example, if a person stays on a Newstart or Youth Allowance (Other) payment for two years, on average they will remain on a working age payment for another five to six years.
The Government’s innovative $752 million Youth Jobs PaTH (Prepare-Trial-Hire) Programme will help young job seekers to move off welfare and into employment.
Youth Jobs PaTH
Stage 1: Employability skills training
To help young people gain a foothold in the labour market, from 1 April 2017, young job seekers will participate in intensive pre-employment skills training within five months of registering withjobactive (unless extenuating circumstances exist).
The first three weeks of training will focus on skills such as working in a team, presentation, and appropriate IT skills. A further three weeks of training will centre on advanced job preparation and job hunting skills.
Stage 2: Internship placement
Up to 120,000 internship placements over four years will be provided to help young job seekers who have been in employment services for six months or more gain real work experience within businesses.
Job seekers and businesses, with the help of employment service providers, will be able to work together to design an internship placement of 4 to 12 weeks duration, during which the job seeker will work 15 to 25 hours per week. Participation in an internship placement will be voluntary for both job seekers and businesses.
In addition to gaining hands on experience in a workplace, job seekers will receive $200 per fortnight on top of their regular income support payment while participating in the internship.
Businesses that take on interns will receive an upfront payment of $1,000, and will also benefit from the opportunity to see what a young worker can do and how they fit in to the team before deciding whether to offer them ongoing employment.
Stage 3: Youth Bonus wage subsidy
Stage three of the new Youth Jobs PaTH provides increased and streamlined wage subsidies for youth.
From 1 January 2017, Australian employers will be eligible for a Youth Bonus wage subsidy if they hire a young job seeker who has been in employment services for six months or more.
The most job ready job seekers will attract a wage subsidy of $6,500. A larger $10,000 wage subsidy will be available to businesses that employ job seekers classified as less job ready byjobactive providers. Businesses will have the flexibility to employ young job seekers either directly, through labour hire arrangements, or combined with an apprenticeship or traineeship.
Fostering innovation and self‑enterprise
Encouraging entrepreneurship and innovation goes to the core of the Government's agenda for jobs and growth. In addition to creating the Youth Jobs PaTH, the Government is investing an extra $89 million in supporting job seekers, including young people, who wish to start their own business. This complements the Government's National Innovation and Science Agenda and will help more Australians capitalise on the opportunities presented by Australia's economic transition.
Building on the success of the New Enterprise Incentive Scheme (NEIS)
From 1 December 2016, eligibility for the NEIS will be broadened to allow access to self-employment training and mentoring for job seekers who are not in employment, education or training, including those not on income support.
The Government will provide funding for an additional 2,300 NEIS places each year, making a total of 8,600 places available annually.
The NEIS will continue to provide eligible job seekers with small business accredited training, mentoring and business advice for up to 52 weeks.
Three new mechanisms to promote and support self‑employment
The Government will establish new 'Exploring Being My Own Boss' workshops to engage job seekers to explore self-employment.
To help young people to develop their innovative ideas into successful businesses, Self-Employment Starter Packs will also be introduced. These will contain information on the services available to support job seekers to establish a business.
Finally, Inclusive Entrepreneurship Facilitators will be appointed in selected locations with high youth unemployment. Facilitators will help bring together available services and programmes (such as jobactive, NEIS, microfinance services, and start-up incubators). They will also provide practical assistance including help accessing local mentors, business partners, finance, office space, equipment and ongoing business development training.
Lowering the tax burden on enterprise
Boosting growth for all Australians.
As we transition from the mining investment boom it is vital that we give businesses every opportunity to invest, innovate, grow and employ more Australians.
We need a tax system that supports enterprise by backing businesses to invest. It must also ensure that Australia continues to be an attractive place to do business. This will secure our future and create jobs for Australians. This will also ensure that we manage the transition to a more diversified economy that continues to expand.
The Government will back small businesses by reducing their tax rate to 27.5 per cent, starting with businesses with a turnover less than $10 million on 1 July this year. This will deliver a lower tax rate for around 870,000 companies who employ over 3.4 million workers.
Over ten years the Government will encourage investment and higher-paid jobs by decreasing the tax rate on all companies to 25 per cent by 2026–27. This will make Australian companies more internationally competitive in a tough global market place.
This means higher living standards for Australians and an expected permanent increase in the size of the economy of just over one per cent in the long term.
The company tax rate for all companies will decrease to 25 per cent over the next ten years.
Small business first
Lower taxes and greater access to tax concessions
Small businesses are the engine room of our economy. They are the home of Australian enterprise and opportunity and they are where many big ideas begin. They employ over 3 million workers and in 2013-14 added around $340 billion to our economy.
This is why we will reduce the tax burden on small businesses first.
Since many small businesses are not companies, the Government will extend the unincorporated small business tax discount.
From 2016-17, the discount will be available to businesses with annual turnover of less than $5 million, up from the current threshold of $2 million, and will be increased to 8 per cent. The maximum discount available will remain at $1,000.
Over the next decade, the discount will be further expanded in phases, to a final discount of 16 per cent.
This means that every year around 2.3 million businesses will potentially have access to the unincorporated tax discount.
Further support will be provided for small businesses to expand and create jobs. Access to a number of tax concessions will be provided by increasing the threshold for these concessions to $10 million, up from the current $2 million threshold. These changes will benefit over 90,000 businesses.
From 1 July 2016 all businesses with annual turnover of less than $10 million will have access to:
These threshold changes will not affect eligibility for the small business capital gains tax concessions, which will remain available for businesses with annual turnover of less than $2 million or that satisfy the maximum net asset value test.
Making it easier to invest in Australia
Investment drives growth which leads to higher wages and better living standards
The Government is making changes so that it is easier to invest in Australia and access alternative sources of investment.
More financing sources
Changes to the tax rules from 1 July 2018 will encourage investment by ensuring that asset-backed financing is given the same tax treatment as conventional financing. Asset backed financing is similar to conventional financing but relies on the trading of assets, sharing of profits or leasing to finance an investment, rather than interest repayments. Asset backed financing arrangements can be used to support infrastructure investment as they are well suited to large and long term projects.
This will enable Australian business to more easily access investment, generating growth and job creation.
New investment vehicles
Changes to the tax and regulatory rules will also create two new forms of investment vehicle – a corporate collective investment vehicle (CIV) from 1 July 2017 and a limited partnership collective investment vehicle from 1 July 2018. These vehicles are internationally recognised and easy to use structures that will make managed funds based in Australia a more attractive place for foreigners to invest.
Creating these new structures will encourage foreign investment as well as the export of funds management services from Australia. Australian exports represent less than 4 per cent of funds under management, highlighting a significant potential export growth industry.
Please be aware that all information listed in this post is published by the Treasury, and all information can be sourced here .