2021-22 Federal Budget Breakdown for Hospitality

On 11 May, the 2021-22 Federal Budget was announced. The budget is centered around the country’s recovery from the pandemic and the government has committed a total of $311bn to fight Covid-19. This includes $290bn in economic stimulus and $20bn on health support.

But how much of the budget is allocated for hospitality businesses and how can you benefit directly from it? This article deep dives into challenges and specific pain points the industry is facing and how the budget caters to them.

Budget breakdown:

• Tackling staff shortage
• Temporary cash flow support
• Tax relief for small brewers & distillers
• Streamlined process to pause ATO debt recovery
• Digital & tech support

Tackling staff shortage

Majority of venues are not only recovering from COVID but performing better than their pre-pandemic sales. In fact, our April’s data shows that venues experienced a 30% increase in sales when compared to their average sales before the pandemic.

While sales are growing, staffing is not. On the contrary, the pool of hospitality staff has shrunk significantly with restrictions like border closures still in place.

With staffing being one of the bigger issues plaguing business owners, the budget has proposed three specific measures to boost the workforce.  

1) No more 40-hour work limit for student visa holders

The government has temporarily lifted the working limit for student visa holders which used to be capped at 40 hours fortnightly. This means international students are able to take more shifts if they are working in the hospitality and tourism industry.

2) 12-month extension for temporary visa holders

The government has also introduced a 408 COVID-19 Pandemic Visa. Temporary visa holders in Australia who are working in a select few sectors, including hospitality and tourism, can extend their stay by an additional 12 months in order to work within the specified sectors struggling with staff shortage.

3) Wage subsidies for new apprentices and trainees

Boosting Apprenticeship Commencement (BAC) subsidy & JobTrainer expansion were also announced in the budget. This would provide eligible businesses wage subsidies for taking on new apprentices and trainees. The 12-month extension of the subsidies, until September 2022, means businesses can grow their workforce with lesser strain on their finances.

Temporary cash flow support

For businesses with less than $5 billion turnover, a segment that most hospitality businesses fall under, will be able to benefit from the extensions of the instant asset write-off and loss carry-back. 

These measures are intended to provide temporary cashflow support to businesses who were in a tax-paying position in previous years but now find themselves in a tax-loss position. And the asset write-off allows businesses to claim faster deductions for assets purchased instead of depreciating it over several years.

Loss carry-back

If your business experienced a drop in profits, you can now offset that drop in profit against the tax you paid in the financial year of 2018-19 or later years. There is no monetary cap on the amount of the tax offset that can be claimed, but it is limited to the amount of tax paid in relation to the previous income year(s). 

Basically, if an eligible business can prove a drop in profit, they will be able to ‘carry back’ that loss and offset it with previous taxes paid going back till the financial year 2018-19.

Instant asset write-off

Last year’s Federal Budget introduced a bigger asset write-off scheme which allowed businesses to immediately deduct the full cost of eligible depreciable assets – which means you can claim the purchase price as a deduction in the next tax return, instead of spreading it over the life of the asset. The threshold for each asset was increased to $150,000 (up from $30,000). 

This scheme has been extended by an additional 12 months in the Federal Budget, so you can write off the complete value of certain assets purchased between the last budget and 30 June 2023 (for businesses with a turnover of up to $5 billion).

Tax relief for small brewers & distillers

In an effort to boost Australia’s alcohol manufacturing sector and support jobs, the budget has allocated $255 million worth of tax relief for small brewers and distillers.

The tax relief comes from the Excise Refund Scheme which allows eligible brewers and distillers to get back any excise tax they pay on the alcohol they produce. The refund is capped at $350,000 – an increase from the previous year which had an annual cap of $100,000 and a maximum refund of 60%.

The scheme kicks off on 1 July 2021, with an estimate of returning an average of $55,000 into the pockets of small breweries and distilleries.

Streamlined process to pause ATO debt recovery

$1.5 million in funding has been allocated in the budget to streamline the process of pausing Australian Taxation Office (ATO) debt recovery.

The Australian Small Business and Family Enterprise Ombudsman, and an independent party has been established to make it cheaper and faster for small businesses to modify/pause ATO debt-recovery actions until their case(s) has a verdict.

Small businesses (and sole traders) with an annual turnover of less than $10 million will be able to apply to the Administrative Appeals Tribunal (AAT) to pause or modify ATO debt recovery actions.

This is a shift from the earlier process where the business had to put their application through the court (instead of the AAT) which would entail legal fees of a few thousand dollars and a timeframe of 60 days for a decision to be made.

Digital & tech support

The Federal Budget has allocated $1.2 billion to build Australia’s digital future with the government’s Digital Economy Strategy. As a component of that strategy, close to $23 million is channeled towards small businesses to improve their tech and digital capabilities.

$10 million for tech-driven award compliance

To simplify the complex industrial relations system, the budget has allocated $10 million over four years for a regulatory technology solution to simplify modern awards by assisting employers to interpret and comply with modern awards.

$12.7 million to expand Australian Small Business Advisory Service Digital Solutions

The Australian Small Business Advisory Service Digital Solutions (ASBAS) program was established in 2018 aimed to increase the digital capability of small business owners. The government funded program provides low-cost advice on digital topics to assist businesses to tackle their business needs with technology and grow their digital presence.

The budget has pumped an additional $12.7 million in 2021-22 to expand ASBAS, with an estimate of assisting 17,000 small businesses.

As a whole the Federal Budget has been welcomed by hospitality groups and supporters, including Restaurant and Catering Australia’s CEO, Wes Lambert, who shared “The 2021-22 Budget doesn’t just get our sector a seat in the dining room, it puts us at the head of the recovery table.”