In a win for distillers and brewers across the country, Federal Treasurer Josh Frydenberg announced an increase in the excise refund cap for distillers and brewers from $100,000 to $350,000 in the 2021/22 Federal Budget. The move puts alcohol manufacturers on an equal footing with wine producers.
From 1 July 2021, all eligible brewers and distillers will receive full remission - up from 60 per cent - of any excise they pay on the alcohol they produce up to a cap of $350,000 each financial year.
It will align the benefit under the existing Excise Refund Scheme for brewers and distillers with the existing Wine Equalisation Tax Producer Rebate, putting all alcohol manufacturers and wine producers on an equal footing.
Treasury expects around 600 brewers and 400 distillers will benefit from $225 million in tax relief over the forward estimates period in the 2021/22 Budget.
An extension to the temporary instant asset write-off, and the loss carry-back, for another two years, at a cost of $20.7 billion for the two schemes. It also boosted its apprentice training support which pays business half the wages.
A new expense was added as businesses will now have to pay super for all low income part-time employees, but tax on staff shares was axed, and the amount that could be given in shares to staff dramatically increased.
The treasurer also increased the power of SMEs to pause or modify action taken against them by the Australian Taxation Office, including giving the Administrative Appeal Tribunal the ability to defer any payment demanded by the ATO until the matter has been finally resolved.
The instant asset write-off, or temporary full expensing, enables business to depreciate the full cost of assets bought in the current tax year, rather than writing them off over several years. It will now run until 2023 and includes assets such as software, technology, vehicles, plant and equipment.
The loss carry-back rule means a business that made a loss because of COVID-19 can carry back those losses against previous years, back to 2018/19, when they were in profit. The caveat is that the amount carried back cannot be greater than earlier taxed profits. It runs until the 2022/23 tax year.
The loss carry back is aimed to support business cashflow, particularly for those companies that had been making profits and paying tax on them, but fell into loss due to COVID-19.
The new super rule for part-time employees means that whereas before business did not have to pay super for staff earning less than $450 a month, now they do for staff earning from $200 per week, at the standard rate. And the government is going ahead with its schedule to raise employer super contributions to 12 per cent of wages.
The government is also pumping an extra $2.7 billion into extending its Boosting Apprenticeship Commencements programme. It will pay businesses a 50 per cent wage subsidy over 12 months for newly commencing apprentices or trainees signed up by 31 March next year, capped at $7000 per quarter, per apprentice or trainee.
Announcing its extension to Parliament, Treasurer Josh Frydenberg talked up the success of the instant asset write-off, saying the extension, “would allow tradies to buy new utes, manufacturers to expand production lines and farmers to replace harvesters.”
He said, “Our record investment incentives are filling the order books of the nation. Over 99 per cent of businesses, employing 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.”
Many staff will be better off under the new budget, with Frydenberg extending the tax offset of up to $1080 for people earning less than $90,000, or $2160 for couples, to 2023.
The treasurer also incentivised staff to take ownership in the company they work for, cancelling taxation on shares they own in a company which is paid when they leave it, and enabling employers to issue $30,000 worth of shares per employee per year, up from the present $5000.
More information on tax announcements here.
