Rateseeker Round-Up: May Business and Finance News
May was jam-packed with news off the back of the latest Federal Budget.
In welcome news, businesses are set to benefit from a number of new tax breaks. Workers are also flocking back to capital cities around the country, which is, in turn, driving up a surge of demand for commercial property prices.
Read the must-know updates from the business and finance sector below.
Federal budget introduces tax breaks for businesses
In the 2021/22 Federal Budget, the government announced two tax incentives for small and medium-sized businesses. These temporary measures are estimated to create around 60,000 jobs by the end of 2022-23.
Base rate entities (businesses with an aggregated turnover of less than $50 million) will benefit from a reduced company tax rate from 27.5% to 25%. This reduced rate applies from the 2021-22 income year onwards.
In addition, the temporary full expensing and temporary loss carry-back provisions that were introduced during the pandemic will be extended for another year.
Temporary full expensing allows businesses with an aggregated turnover of less than $5 billion to immediately deduct the business portion of the cost of eligible new depreciating assets. For base rate entities, this provision also applies to the business portion of second-hand depreciating assets.
The loss carry-back offset allows eligible corporate entities to claim a refundable tax offset by choosing to carry back losses to earlier years in which there were income tax liabilities. This can be claimed after the end of the 2020–21 and 2021–22 income years and in 2020–21 and 2021–22 company tax returns.
Furthermore, the Federal Government is making it easier for businesses to offer employee share schemes by removing the cessation of employment taxing point for tax-deferred schemes.
Searches for commercial property soar
With large parts of the country returning to work, the commercial property market is soaring. Data from realcommercial.com.au found that the total ‘Buy’ searches for commercial real estate in March and April were the highest and second-highest months on record. The total ‘Buy’ searches for April 2021 were 61% higher than the year before.
Interest was up across all categories, with the biggest increases coming from showrooms, warehouses and retail:
- Showrooms = up 147%
- Retail = up 143%
- Warehouses = up 143%
- Land = up 137%
- Medical = up 131%
- Offices = up 112%
- Hotel/leisure = up 61%
- Commercial farming = up 19%
‘Lease’ searches recorded an even bigger year-on-year increase of 65%.
Workers return to Australian capital cities
Workers are swapping their home offices for city spaces, according to the Property Council of Australia. After a year of working from home, CBD occupancy rates have bounced back and are trending up for 2021 — particularly in Sydney and Melbourne.
Between January and April, occupancy rates increased in six of the eight capitals:
- Darwin = 80% to 84%
- Hobart = 80% to 82%
- Perth = 66% to 70%
- Adelaide = 69% to 70%
- Brisbane = 63% to 63%
- Canberra = 68% to 63%
- Sydney = 45% to 59%
- Melbourne = 31% to 41%
“The benefits of bustling CBDs are significant, not just for the small businesses that rely on city foot traffic, but for the broader Australian economy.”Property Council chief executive Ken Morrison
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