Posted October 8, 2020
After the year that was 2020, we knew that Budget Night 2020 was going to be like no other. After programs like JobKeeper and JobSeeker, and knowing that those were due to both drop down and end, many Salon Owners were keen to know what the future looked like for government support in those industries very adversely affected by the Corona Virus. The Morrison Government definitely delivered programs that will support business owners in particular, but there are areas of missed opportunity in this budget. There was a serious focus on increasing business and personal confidence to try to quash the fears of a severe recession facing Australians, with more programs than ever dedicated to supporting and incentivising small businesses.
HABA have drilled into the changes in the budget and pulled out some key insights on what the Australian Budget 2020 means for salon owners, so read on for a glimpse of what is to come –
JobMaker hiring credit
The Government’s new JobMaker Hiring Credit is a key part of the Morrison Government’s Plan to boost Australia’s economic recovery. The JobMaker Hiring Credit will help to accelerate growth in employment during the recovery by giving businesses incentives to take on additional employees that are young job seekers aged 16 to 35 years old, and is estimated to support around 450,000 positions for young people and cost $4 billion from 2020-21 to 2022‑23.
The Federal Government has announced it will roll out a $1.2 billion wage subsidy scheme for trainees and apprentices. Trainees and apprentices who are put on the books from the 5th of October will have half their wages paid for 12 months. The subsidy will be paid directly to the employer when they hire a new apprentice or trainee, with the rest of the money will be transferred quarterly, in arrears. This subsidy is only in place for a year and capped at 100,000 places.
In July, the Government unveiled a 50 per cent wage subsidy for existing apprentices, so they would not be laid off. The scheme known as “JobTrainer” was also introduced to help young people bolster their training and skills.
The Morrison Government is delivering an additional $17.8 billion in personal income tax relief to support the economic recovery, including an additional $12.5 billion over the next 12 months. This is in addition to the $8.1 billion in tax relief that will be delivered for the 2020‑21 income year under the already-legislated Personal Income Tax Plan.
Under the Government’s changes, individuals will benefit from bringing forward the tax cuts in Stage 2 of its Plan, alongside a one-off additional benefit from the low- and middle-income tax offset in 2020-21.
Temporary tax incentive
From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The incentive will be available to over 99% of businesses that employ around 11.5 million workers. The incentive will apply to around $200 billion worth of investment, including 80% of investment in depreciable assets by non-mining businesses. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
There are a number of personal income tax cuts that will directly benefit the many small businesses that are unincorporated and the loss carry-back scheme will provide a desperately needed injection of capital for companies that were previously profitable.
The Government will also allow companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid, to generate a refund. Loss carry-back will be available to around 1 million companies that employ up to 8.8 million workers. Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns.
Mental health aid for small business owners
The Morrison Government will provide $6.5 million in 2020-21 to support mental health and wellbeing of small businesses impacted by COVID-19. This includes a $4.3 million allowance to expand their current mental health program for small business owners, which will provide small business owners with access to free one-on-one telehealth sessions with specially trained mental health coaches.
A serious commitment has been made to changes bankruptcy and insolvency laws that put the small business owner in control of insolvency actions. This effectively gives them a lifeline to trade their way out of insolvency, and where that is not possible, a simplified liquidation process will ensure greater returns to creditors and employees.
The Covid-19 Shut Down saw many salons turn to their digital platforms more than ever before, whether it was to build a social-media following, or using their website to kickstart e-commerce sales. The Digital Business Plan will build on this to support an even greater adoption of new technologies across the economy – by both businesses and consumers. An additional $4.5 billion investment in NBN Co will bring ultra-fast broadband to millions of families and businesses. Funding of $29.2 million will also accelerate the rollout of the 5G network.
Unfortunately, there were a few missed opportunities in the 2020 Budget. The rising cost of energy was not addressed for businesses at all, which is especially important for salons and spa’s where energy usage is very high.
There was no addressing of how to entice teens into skills shortage areas like the hair and beauty industry, although the JobMaker Plan is designed to target the ideal age group.
The government also had an opportunity to help businesses manage through a recovery phase by introducing a small business viability program but chose not to. Many businesses are in the recovery phase, somewhere between survival and growth, but there is no support aimed at those businesses.
Many of the budget measures are built on an assumption that businesses will have the cash to spend, when this really isn’t the case.
These are all areas that our members are crying out for relief from, and HABA are actively pushing Government to address.
Overall, there are lots of positive notes for salon owners to take out of the Australian Budget Announcement for 2020. While individual measures might appear to be modest, it’s really when all the measures cumulate that they will have the greatest impact for salon owners. It is so key that salon owners stay informed and keep the Government accountable for legislation and changes, and HABA will continue to be your partner in pushing for changes to benefit salon owners at all levels of Government and in keeping you informed as these changes occur. That’s why it pays to be a HABA member. Become a HABA Member by calling the office on (02) 9221 9911.
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