Both measures, which were first announced last year but have now been extended, will cost the budget a combined $20.7 billion over four years. Treasury estimated the business incentives, including those announced last year and on Tuesday, would apply to about $320 billion worth of investment and create around 60,000 jobs by the end of 2022-23.
While there were fears the pandemic would cause a dramatic fall in business investment, which is crucial for economic growth, the government said its incentives had given firms a strong impetus to bring forward their spending.
‘[We are extending] these measures … so a tradie can buy a new ute, a farmer a new harvester and a manufacturer expand their production line.’
The tax incentives were the most significant changes among a series of measures for business, alongside ones to attract overseas investment and to encourage firms to diversify their export markets.
Under a change designed to help firms attract talent, and exploit Australia’s strong containment of COVID-19, the government will simplify rules on employee share schemes, which are often used by start-ups to lure staff.
The moves, which will cost the budget $550 million, will result in the government changing the point at which staff must pay tax on these shares to avoid people being forced to pay it immediately when they leave their employer.
“These changes will see more Australians benefit from our economic recovery and help businesses attract the best and brightest from Australia and around the world,” the government said.
After escalating tensions with China exposed Australia’s trade dependence on the country, the budget also includes $87.7 million in funding to encourage farmers to diversify their export markets.
The government will also establish a new process to give investors greater certainty about the tax implications of large investments, and it will review the tax treatment of venture capital, including how current settings affect incentives to invest in start-ups.