Previously legislated tax cuts for low and medium income earners have been brought forward to 1 July 2020 (previously 1 July 2022).
2020-21 Federal Budget Snapshot
October 8, 2020
The 20/21 Budget is focused on rebuilding the economy and creating employment by increasing infrastructure spending, bringing forward individual tax cuts, allowing unprecedented tax deductions for eligible capital expenditure and increasing R&D incentives.
The Haslam team has reviewed the budget papers and prepared this snapshot of the major 20/21 Budget announcements.
Personal Tax Cuts
Capital Expenditure
Businesses with aggregated turnover of less than $5 billion can deduct the full cost of eligible capital assets acquired from 6 October 2020 to 30 June 2022. Additional concessions also available for small businesses (turnover less than $10 million).
Loss Carry Back
Companies with aggregated turnover of less than $5 billion are eligible to “carry back” their tax losses and claim a tax refund in their 2020-21 or 2021-22 tax returns. This is unavailable if it results in a franking deficit.
Jobs - Hiring Credit
$4 billion in cash incentives for businesses to hire certain employees aged between 16 to 35 years of age.
Jobs - Apprentices & Trainees
$1.2 billion JobTrainer wage subsidies for Australian businesses to employ 100,000 new apprentices or trainees.
Health
$1.7 billion to secure access to over 84.8 million doses of COVID-19 vaccines developed by the University of Oxford/AstraZenca and the University of Queensland/CSL Limited.
Small Business
Certain small business tax concessions (e.g. prepayments, start-up expenses, two year amendment period etc.) are available to entities with turnover of less than
$50 million (previously $10 million).
Welfare Payments
Two additional Economic Support Payments of $250 to pensioners and other eligible recipients.
R&D (Research & Development)
For small companies with a turnover of less than $20 million, the refundable R&D tax offset will be increased to a fixed percentage of 18.5% above the company tax rate. For larger claimants, the intensity test will be streamlined from 3 to 2 tiers with the non-refundable R&D tax offset rate being 8.5% above the company tax rate for R&D expenditure up to 2% R&D intensity, and 16.5% for R&D expenditure above 2% R&D intensity. These changes will apply from 1 July 2021.
FBT (Fringe Benefits Tax)
Exemption for retraining and reskilling employees for all employers. Car parking exemption extended to businesses with turnover of less than $50 million. Small businesses will be able to rely on existing corporate records rather than employee declarations.
Superannuation
Establishment of an online comparison tool known as ‘YourSuper’ to help individuals manage their retirement savings. The legislated increases to Superannuation Guarantee will remain in place.
Infrastructure
$10 billion committed to road and rail projects, road safety and community infrastructure.
The information provided in this article is for general advice only and does not represent, nor intend to be advice. We recommend that prior to taking any action or making any decision, that you consult with an advisor to ensure that individual circumstances are taken into account.
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