The 2020/21 Federal Budget was delivered on Tuesday 6th October by the Federal Treasurer, the Hon. Josh Frydenberg MP.
There will be many questions over the coming days, however TSP Accountants have summarised some of key points in this article. If you feel you are affected by any of these changes please get in contact with us here, so we might be able to assist in your personal circumstances.
Personal Income Tax Changes
The Government has announced it will bring forward changes to the personal income tax rates
that were due to apply from 1 July 2022, so that these changes will now apply from 1 July 2020. These
changes are:
| Rate | Current | Proposed [from 1 July 2020] |
| 0% | 0 – $18,200 | 0 – $18,200 |
| 19% | $18,201 – $37,000 | $18,201 – $45,000 |
| 32.5% | $37,001 – $90,000 | $45,001 – $120,000 |
| 37% | $90,001 – $180,000 | $120,001 – $180,000 |
| 45% | $180,000 + | $180,000 + |
Changes to the Low Income Tax Offset (LITO)
The Government announced that it will also bring forward the changes that were proposed to the
LITO which are outlined below:
| Current LITO | Proposed LITO | ||
| $0 – $37,000 | Up to $445 | $0 – $37,500 | Up to $700 |
| $37,001 – $66,666 | $445 less 1.5% of excess over $37,000 | $37,501 – $45,000 | $700 less 5% of excess over $37,500 |
| $66,667 + | Nil | $45,001 – $66,666 | $325 less 1.5% of excess over $45,000 |
| $66,667 + | Nil |
Small Business Tax Concessions Expansion
The Government has announced that it will expand the concessions available to Medium Sized
Entities (turnover of at least $10 million and less than $50 million) to provide access up to ten Small
Business Concessions.
The expanded concessions are:
| Date | Concession |
| From 1 July 2020 | Can immediately deduct certain start-up expenses and certain prepaid expenditure. |
| From 1 April 2021 | FBT exemptions for car parking and multiple work-related portable devices. |
| From 1 July 2021 | * Access simplified trading stock rules. * 2 year amendment period will apply to income tax assessments from 1 July 2021. * Simplified accounting method determination for GST purposes |
JobMaker Hiring Credit
From 7 October 2020, eligible employees will be able to claim an incentive for taking on additional
young job seekers. New jobs created until 6 October 2021 will attract the incentive for up to 12
months from the date the new position is created.
The JobMaker Hiring Credit will be claimed quarterly in arrears from the ATO from 1 February 2021. The amount paid will be $200 per week for employees aged 16 to 29 years old at their employment
start date and $100 per week for employees aged 30 to 35 years at their employment start date. The
amount is capped at $10,400 for each additional new position created.
Eligible Employee Criteria includes:
- Have worked at least 20 paid hours per week on average for the full weeks they were employed over the reporting period
- Have received either JobSeeker, Youth Allowance (Other) or Parenting Payment for at least 1 month within the past 3 months before they were hired
- Be in their first year of employment
Eligible Employer Criteria includes:
- Active ABN
- Up to date with lodgement obligations
- Registered for PAYG Withholding and reporting through Single Touch Payroll
- Able to demonstrate that the credit is claimed in respect of an additional job that has been
created
Immediate Write-Off for Depreciable Assets
The Government has announced that small businesses with an aggregated annual turnover of less
than $10 million can deduct the balance of their simplified depreciation pool at the end of the
income year up to 30 June 2022.
Loss Carry Back Measure
The Government has announced that it will introduce measure to allow companies with a turnover
of less than $5 billion to carry back losses from the 2020, 2021 or 2022 income years to offset
previously taxed profits made in or after the 2019 income tax.
This will occur via a refundable tax offset which can be claimed in either the 2021 or 2022 income
tax return. The offset will be limited to the earlier taxed profits.
FBT Exemption for Retraining Employees
From 2 October 2020, the Government will encourage employers to assist redundant employees to
transition to new employment within or outside the employer’s business by introducing a FBT
exemption for retraining and reskilling benefits. The exemption will not extend to Commonwealth
supported places at universities (which already receive a benefit) or extend to repayments towards
Commonwealth student loans.
For further information about any of the above or indeed the other facets to the Federal Government’s new budget that may affect you personally or your business, please give us a call or email us here.