In early September, the Australian economy was described as being in recession – in other words, the economy was contracting rather than expanding, and the unemployment rate was rising.
While the economy hasn’t performed as badly in the past few months as it did in the first half of this year, we are not out of the woods yet, and it’s acknowledged that it’s going to be a bumpy ride.
In an attempt to stimulate activity, on 3 November, the Reserve Bank of Australia (RBA) announced interest rates would be cut to 0.1%, down from the previous record low of 0.25% announced earlier this year. Furthermore, the RBA said while it is “extraordinarily unlikely” that rates would be cut any further, they are likely to remain as they are for at least three years.
As well as lowering interest rates to record levels, the RBA will buy $100 billion worth of Australian government bonds over the next six months. The aim of this “quantitative easing” as it’s known, is to lift inflation and encourage lending and investment, in the process of helping the country to recover economically.
As a business, lower interest rates mean you’ll have access to finance that’s guaranteed to be cheap over the next few years, providing you with a chance to invest in development. The ability to do so has been further supported by a raft of incentives the Australian Government announced in the October 2020 budget to stimulate business. These include:
Immediate tax deductions on assets – the ability for businesses with up to $5 billion in annual turnover to claim immediate tax deductions on the full cost of eligible assets of any value – as long as they’re purchased from 6 October 2020 and first used or installed by 30 June 2022.
Furthermore, small to medium enterprises with up to $50 million in annual turnover, can take advantage of “full expensing” for all second-hand asset purchases. Businesses earning between $50 million and $500 million per year, can apply full expensing to second-hand purchases of assets up to $150,000 each.
Extended instant asset write-off – businesses earning up to $500 million per year can instantly write off multiple eligible asset purchases capped at $150,000 each until June 2021.
Loss carry-back to boost cashflow – businesses with an annual turnover up to $5 billion can offset any losses made during the 2019-20, 2020-21 and 2021-22 income years by claiming back taxes paid on profits made from 2018-19 onwards.
Looking for Growth?
If you’re looking to develop your business, now is a great time to invest in assets and engage contractors with the essential skills and expertise you need to put them to work. As one of few companies to be approved by the Department of Home Affairs (Immigration) to on-hire overseas professionals, the Ayers Group is able to hire employees on 482 Visas who will then be free to contract their services to you. We can also manage your contractor arrangements and your payroll with our tailored payroll solutions. Ask an expert at the Ayers Group about how we can help you today.
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