LOWER PERSONAL TAXES
The Government is bringing forward the personal tax cuts in stage 2 of its plan from 1 July 2022 to 1 July 2020. The stage 3 cuts retain their original start date of 1 July 2024.
The stage 2 tax rates are in the table below. This will provide tax savings for those with incomes of less than $90,000 of up to $2,475 for singles and $5,490 for dual income families.
There is a one-off additional Low and Middle Income Tax Offset in 2020/21. The LMITO is worth $1,080 for individuals and $2,160 for dual income families. It was due to be removed with stage 2, but this one-off payment will be available in 2020/21.
SUPPORTING SMALL BUSINESS
Temporary full value asset write-off
The Government is providing a temporary tax incentive which will be available to 99% of businesses.
From 6 October 2020 (7.30pm) until 30 June 2022, businesses with turnover of up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed.
The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
Temporary loss carry-back
Companies with turnover up to $5 billion can offset losses against previous profits on which tax has been paid, to generate a tax refund.
Losses incurred up to 2021-22 can be carried back against profits made in or after 2018-19. Eligible companies may elect to receive a tax refund when they lodge their 2020-21 and 2021-22 tax returns.
Small business tax concessions
The government has announced an increase in the threshold for small businesses which will allow a business with a turnover up to $50 million to access up to 10 small business tax concessions. The concessions are as follows:
- Immediate deduction for certain start-up expenses (1 July 2020)
- Immediate deduction for certain prepaid expenditure (1 July 2020)
- FBT exemption for car parking benefits (1 April 2021)
- FBT exemption for multiple work-related portable electronic devices (1 April 2021)
- Simplified trading stock rules (1 July 2021)
- Remit PAYG instalments based on GDP adjusted notional tax (1 July 2021)
- Settle excise duty monthly on eligible goods (1 July 2021)
- Settle excise equivalent customs duty monthly on eligible goods (1 July 2021)
- Two year amendment period (1 July 2021)
- Simplified accounting method determination for GST purposes (1 July 2021)
Manufacturing and R & D
The Government will co-invest with manufacturers to help them achieve scale and commercialise world leading research and connect to international markets.
They are also investing an additional $2 billion through the R & D tax incentive. For small claimants (turnover less than $20 million), the government will increase the refundable R & D tax offset and there will be no cap on annual cash refunds. The offset will be 18.5 percentage points above their corporate tax rate.
For large claimants, the intensity test will be streamlined, and the non-refundable R & D tax offset will be increased as follows:
- 8.5 percentage points above the tax rate for R & D expenditure between 0% and 2% intensity
- 16.5 percentage points above for expenditure above the 2% intensity
Changes to apply from 1 July 2021.
FBT retraining and compliance
There will be an exemption from FBT for employer provided retraining activities to employees who are redeployed to a different role in the business.
The government will allow employers to rely on existing corporate records, such as travel documentation, rather than employee declarations and other prescribed records to finalise their fringe benefits tax returns.
MODERNISING TAX TREATY NETWORK
Government will support the recovery from COVID-19 by modernising and expanding our tax treaty network to eliminate double taxation, settling taxing rights between countries and attracting foreign investment and skilled workers.
CAPITAL GAINS TAX – GRANNY FLATS
There will be a targeted CGT exemption for granny flats from 1 July 2021 where there is a formal arrangement in place.
More detail regarding the eligibility critera to come.
SUPPORTING FIRST HOME BUYERS
The First Home Loan Deposit Scheme has been extended for an additional 10,000 first home buyers.
JOBMAKER HIRING CREDIT
JobMaker will be available to eligible employers from 7 October 2020 for each new job they create over the next 12 months for which they hire an eligible young person, for more than 20 hours per week.
In general terms employers will receive for up to 12 months, $200 a week for employees they hire aged 16 to 29 and $100 a week for those aged 30 to 35. Capped to 100 employees per employer.
There is a lot of detail regarding eligibility requirements to be considered.
The JobTrainer program will provide free or low fee training places in areas of genuine need to help upskill and retrain job seekers and young people including school leavers.
The program incorporates a range of measures to help connect job seekers to employment and training opportunities.
The government will also support school leavers and displaced workers by creating additional university undergraduate places (17,000 additional places in 2021).
ECONOMIC SECURITY FOR WOMEN
This measure includes employment programs to support women’s leadership and development, to increase opportunities for women in science, technology, engineering, and mathematics.
Further additional funding will be provided to expand the initiative to provide women entrepreneurs access to expert mentoring and business advice.
For the first time, Australians will automatically keep their superannuation fund when they change employers. This will stop the creation of unintended multiple superannuation accounts.
Also, funds that underperform will no longer be allowed to receive new members until their performance improves.
The Government will provide two additional bonus payments of $250 to pensioners. The payments will be in December 2020 and March 2021.
- $200M in grants and $100M for tourism related infrastructure to boost regional tourism
- Funding to help attract domestic visitors
- Funding for rural health workforce
- Funding for activities that directly benefit regionally based industries
- Improve mobile and broadband services
- Funding to help exporters
- Funding to find workers
Your Cooper Reeves Adviser can assist you to understand what these budget measures mean for you. Our Advisers are reaching out to all clients however if you have immediate questions and want to discuss your circumstances, please contact your Adviser on (07) 3875 9888.