Tuesday night’s Budget was probably the most anticipated Budget that I can remember. It shows how desperate we have become when the whole family and I sat down on the couch at 7:30 with some popcorn and settled in to hear what Josh Frydenberg had to say. (It prompted some great questions from the kids – 1. Why don’t they just give the money to the people that need it? 2. Why don’t we just stop paying taxes for 1 year?)
So how do I think the budget helps pharmacy? Well, if you’re planning on hiring a younger person, you will receive a rebate from the government to cover part of that person’s wage. This is a great initiative and will prompt those that were sitting on the fence before hiring, commit to increase their team. With the exception of Victoria, it would appear that pharmacy trade is shifting back to a somewhat normal level and so I wouldn’t expect the lack of confidence that exists in other sectors, to impact on employer confidence in employing more staff. This hiring credit is paid at the rate of $200 per week for those employees under 30 and $100 for those employees between 30-35. You will need to claim the rebate each quarter for 12 months and will need to demonstrate an increase in overall employee headcount and payroll spend. (So no employing a bunch of younger people and getting rid of the existing employees – OK!)
I’m a little more suspect on the Instant Asset Write Off. While it’s a great idea that you can write off any business asset immediately without having to depreciate it over time, you still need to have the funds and the confidence to spend that money in the first place. Pharmacy robots may be on the radar for some but not all. A new delivery car may now be an option. However, the sentiment that I have been getting back from pharmacy owners over the last day or so is that they just don’t have the confidence to spend that sort of dough. They want to wait and see what the next 6 months or so looks like. 2020 has caused a few scars and many are wary of committing to anything major in the near future.
Personal tax rates also look like they will be lowered once the bill is passed in parliament. No doubt many of you will have employees asking for the tax break to be applied straight away. Some may even ask for the extra tax that they have already paid this year to be refunded. Until directive is received by the ATO, you are advised to do neither. The marginal tax rates will be published and applied as soon as they are law. Any tax already paid will need to be claimed when the employee does their end of year tax return – where they will be likely to receive larger refunds than they have in the past.
With JobKeeper pretty much finishing for most pharmacies now and the cash flow boosts due to end this month – it’s never been more important to keep an eye on your cashflow first and then start to look at the possibility of taking advantage of some of these incentives announced in the budget.