The Victorian Government this week unveiled their 2020/21 Budget that will encourage the state’s small business sector to play a significant role in a jobs-led recovery from the pandemic.
Headlining the announcements, the government has pledged $1.5 billion in new tax relief for businesses. This funding builds on the Victorian Government’s existing support that tallies more than $3.5 billion in tax and fees relief to workers, businesses and households to help them recover.
Here’s what’s in store for Victoria’s small business community, in addition to the Federal Budget announced last month.
Support for SMEs with plans for hiring staff
The tax relief includes the New Jobs Tax Credit, which supports small and medium businesses that rehire staff, restore hours or create new jobs.
Under the plan, these businesses will receive a tax credit of ten cents for every dollar it increases taxable Victorian wages – giving businesses the confidence they need to open their doors, hire more staff and recover from the pandemic.
This incentive means the more these businesses re-hire staff and employ new workers, the less payroll tax they’ll have to pay. This emergency tax relief measure will be available for two years, saving businesses a combined $836 million and should help to support an estimated 9,400 people back into employment[i].
More payroll tax relief
The New Jobs Tax Credit will be additional to the more than $1 billion in payroll tax refunds and waivers the state government has provided since the pandemic began in March.
This ongoing support includes allowing small and medium businesses to defer their 2020-21 payroll tax until next financial year, providing a $1.7 billion boost for businesses.
The Government will also increase the threshold for paying payroll tax on an annual basis from $40,000 to $100,000, reducing administration costs and providing $309 million of cash flow support to 7,000 businesses[ii].
Stamp duty waiver
In support of the residential construction industry, there will be a stamp duty concession of up to 50% for homes valued up to $1 million for contracts entered into from 25 November 2020 to 30 June 2021. Relief will be targeted at newly built or “off-the-plan” homes, which will receive the full 50% waiver. Existing homes will be eligible for a 25% waiver.
Further, in a bid to lure businesses to regional Victoria, a 50% stamp duty concession on the purchase of commercial and industrial properties will be brought forward to January 2021 – encouraging more businesses to open, relocate or expand, and help hard-hit regional economies to bounce back. This investment will save businesses a further $39.6 million[i].
Meanwhile, payroll tax in regional Victoria is already dropping to 25 per cent or less than half the metropolitan rate – the lowest anywhere in Australia.
Support for hard hit industries
The government has pledged $2.6 billion in grants from the Business Support Fund to help the hardest-hit sectors including hospitality, tourism, accommodation, creative industries, and retail[ii].
The 2020 and 2021 liquor licence fees have also been waived, while the 2020-21 Fire Services Property Levy was frozen at the 2019-20 revenue target.
Technology support for SMEs with growth potential
As part of the 2020/21 Budget, the government promised to finance more tools to help SMEs adapt and adopt new digital technology. The $6 million Small Business Support Toolkit will fund best-practice workshops, mentoring and coaching services across the state. The goal is to assist businesses to digitise and innovate, adapt to meet changing customer needs and navigate regulatory requirements across different levels of government[iii].
At least 1,000 businesses with high-growth potential will benefit from the $5 million Ready for Growth Initiative. These businesses will be offered tailored services including masterclasses and personalised coaching in digital engagement. The aim of the initiative is to assist these businesses develop better products and services, build their workforce and compete in a globalised economy.
Ready for Growth is additional to Upskill My Business, which is providing free access to online short courses and training events, and the $10 million Business Recovery and Resilience Mentoring program that is connecting SME owners and sole traders with free business mentoring and advice. In a similar vein, the $20 million Small Business Digital Adaptation Fund is helping sole traders and micro and small businesses to build digital capability in their day-to-day operations.
Victorian Minister for Small Business Jaala Pulford, said that latest budget is backing “our small businesses to recover stronger than ever, working shoulder-to-shoulder and providing practical support.
“Small businesses have shown amazing determination and grit during the pandemic and they’ll be a crucial part in getting more Victorians back to work and our state’s economy back on track.”
She added, “We want to help our small businesses develop new skills, find new markets and create new jobs.”
Since March, the Victorian Government has committed more than $13 billion towards measures to fight coronavirus (COVID-19), including more than $7 billion in direct economic support for Victorian businesses and workers[iii].
Get in touch today to find out about OnDeck’s funding options that could support with finance for your SME’s recovery planning.
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