As part of this, he revealed the government will bring forward Stage Two of its Personal Income Tax Plan, seeing more than 11 million taxpayers get a tax cut backdated to 1 July 2020.

“It is estimated these measures to reduce the personal income tax burden and encourage business investment will create around 100,000 jobs by the end of 2021-22 and boost GDP by around $6 billion in 2020-21 and $19 billion in 2021-22,” Mr Frydenberg said.

Unpacking the tax and other fiscal pledges, Pilot Partners tax partner Murray Howlett said that boutique law firms should be looking forward to a couple of key measures in this space.

“Of note is the ever-changing world of instant asset write-offs, proposed to now include ‘immediate expensing’ of the full cost of eligible depreciating assets – no upper cost limit. This is set to be available for some 99 per cent of all businesses (aggregated turnover threshold now a cool $5 billion) for new assets acquired from budget night until 30 June 2022,” he explained.

“Various other iterations of accelerated depreciation were proposed and currently already exist, which provide some enticing incentives if you can decipher all the variables. The other key item that will appeal to boutique law firms is the proposed extension to the ‘small business entity’ turnover threshold to $50 million (up from $10 million).”

This will allow, Mr Howlett continued, a wider spread of businesses to access the concessions currently in place, “including exemptions for FBT on car parking and the ability to deduct certain start-up and prepaid expenditure”.

“It remains obvious however that the Government is still pushing benefits for corporates, with a number of other incentives available only to those who incorporate their business. These measures, such as updates to the R&D tax incentive and the carry-back loss provisions, although beneficial to a wide array of taxpayers out there, may be less beneficial in the boutique law space,” he said.

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businessDEPOT managing director John Knight noted that even though the announced tax cuts are personal tax cuts, “they are just as relevant for those law firms that are in an incorporated structure – the money has to come out sooner or later so the lower tax rates mean you can pay more out each year”.

“Interestingly, the tax cuts are to be backdated to 1 July 2020 – obviously the Government wants the money being spent in the economy. We don’t know for sure yet, but we expect the lower tax rates to hit the pay packets of employees after the legislation receives Royal Assent with the portion relating to the last three months or so being paid out as a tax refund on lodgement of your 2021FY income tax return,” he advised.

“Although the immediate deductions for the purchase of assets (no matter how much) sounds great, there are not many sizable assets a boutique law firm needs.  But if you are looking to upgrade computers or invest in software, you no longer have the urgency to spend the money and install the item before 31 December 2020.”

The temporary company loss carry-back provisions, Mr Knight continued, are “great” for those businesses that are currently incurring a loss, or will incur a loss next year, “but fingers crossed that you are not in loss territory in the first place”, he added.

“One of the economic insights from the budget is that the Treasurer obviously predicts when the economy rebounds, it will rebound quite strongly. The budgets are working off 4.75 per cent growth in the next financial year but this will be coming off a low base.”