Below we comment on what we see as some of the opportunities and risks for businesses in 2021:

Opportunities

Incentives to create jobs
The Boosting Apprenticeships wage subsidy is available to businesses of any size or industry who employ a new apprentice or trainee between 5 October 2020 and 30 September 2021. It covers 50% of the wages of the new apprentice or trainee during this period – capped at a maximum of $7,000 per quarter.



The JobMaker Hiring Credit is available to businesses who take on additional employees between 7 October 2020 and 6 October 2021. The credit is:

1. $200 a week for new employees aged between 16 and 29, for up to 12 months from the date of employment.
2. $100 a week for new employees aged between 30 and 35, for up to 12 months from the date of employment.

Some states are offering incentives to support employment. It is worth checking out what may be offered within your state/territory or locally. Examples include:

1. New South Wales has reduced the rate of payroll tax from 5.45% to 4.85%, effective 1 July 2020.
2. New South Wales is also investing $2 billion in regional infrastructure through the Regional Growth Fund.
3. Victoria’s New Jobs Tax Credit of 10 cents for every dollar of increased taxable Victorian wages.
4. Western Australia is offering eligible employers up to $8,500 towards new apprenticeships and traineeships through an Employer Incentive Scheme.

JobTrainer Fund
The JobTrainer Fund provides for up to 320,000 persons to access free or low cost training in areas such as aged and disability care, health, IT and trades. It is available to persons aged 17-24, or those who are out of work and hold a valid and current Health Care, Pensioner Concession or Veteran’s Gold card.

HomeBuilder Grant
An extension has been announced, but is not yet law, to continue the HomeBuilder scheme through to 31 March 2021. The scheme provides a tax free grant to persons who are either building a new home, or making substantial renovations. The grant is $25,000 for building contracts signed between 4 June 2020 and 31 December 2020 inclusive. This reduces to $15,000 under the extension, for contracts signed between 1 January 2021 and 31 March 2021 inclusive. Further eligibility criteria apply, including a price cap on the property value of the new build or renovated property, builders licensing rquirements and that construction must commence within six months of the contract being signed. As at 4 December 2020, 32,464 HomeBuilder applications had been submitted nationally – if all are eligible, this means an injection of $811.6 million into the economy.

Most states and territories also offer grants for first home owners and stamp duty exemptions. Individuals looking at building or buying a home should look up eligibility criteria for further support available in their area as it could provide a significant boost.

Instant asset write off
We seem to write regularly about this – the fact is the last few years has seen the instant asset write-off provisions regularly extended and expanded. Now, until 30 June 2022, businesses with aggregated turnover under $5 billion are eligible and there are no limitations on the value of an asset. See our instant asset write-off article for more details.

Risks

COVID-19 lockdowns, rules and regulations
Each day there is news on various COVID-19 vaccine developments. However until a significant density of vaccination passes there is still a certain level of risk, especially as travel starts to pick up again. Lockdowns have thankfully ended however it is a day at a time as to whether they are over for good. Businesses continue to have COVID-safe obligations and face significant penalities for non-compliance, let alone the reputational damage an outbreak could bring.



Trade relations with China
Throughout 2020 we’ve seen China suspend and penalise various Australian exports in response to Australia’s push for a formal enquiry into the origins of COVID-19:

1. In May, an 80.5% tariff was applied to Australian barley – China normally imports approximately 70% of our barley crop.
2. Also in May, beef exports from four Australian processing plants were suspended – China normally imports 24% of our beef.
3. In September, China announced that Australian exports of wheat would be subject to “enhanced inspection.” Wheat imports from the United States to China increased at the same time.
4. In October, unofficial instruction was given to Chinese importers to stop buying seven types of Australian exports – barley, coal, copper ore and concentrate, lobster, sugar, timber and wine. Items already in transit were simply left in limbo – $2 million worth of rock lobsters were left on the tarmac at Shanghai airport.
5. In November, a “provisional” tariff of 107% to 212% was placed on Australian wine.

With China holding other grievances such as the ban on Huawei from Australia’s 5G network, the new defence pact with Japan and our stances on the South China Sea and Hong Kong, they could well cause further trade disruptions in an attempt to make Australia compliant with their agenda.

Closure of businesses being propped up by JobKeeper
Some businesess have only survived 2020 due to salaries and wages being supported by the JobKeeper wage subsidy. If these businesses don’t have a sustainable cash flow without JobKeeper, the end of the wage subsidy in March 2021 could signal the end of the business.

No doubt we will see other opportunities and risks come up through the year as well. Keep your focus on what you can do (rather than what you can’t do and can’t change), keep positive, and put your best foot forward.

Thanks for reading.

The information contained on this website has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.