The Federal Government Budget – 2020-21, designed to help Australia recover from the COVID-19 recession and to build our economy for the future.
Some Key Initiatives:
- Personal income tax cuts from 1 July 2020
- A $4 billion ‘JobMaker’ Hiring Credit to encourage businesses to take on additional employees aged 16 to 35 years old
- $110 billion in infrastructure investment over 10 years
- Immediate deductions for business investment in capital assets
- Changes to how companies can manage losses
- Access to generous tax concessions for a wider range of businesses
By comparison to many, Australia has managed the COVID-19 pandemic well, but good management isn’t enough to protect us from the $213.7 billion deficit in 2020-21. The Government has taken to heart the old adage, “You have to spend money to make money” to trade our way out of a black hole.
Outside of the big ticket tax measures, what is striking about this Budget is the sheer volume of initiatives it funds – too many to itemise in this update.
Here’s a quick summary of the key areas:
For Businesses
100% Write-Off for Eligible Business Assets
Businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value. Assets will need to be acquired after 7.30pm on 6 October and must be first used or installed by 30 June 2022. Originally this was increased from $30K to $150K and was due to end December 2020. This will be a “game changer” with businesses being incentivised to bring forward new investments to boost the nation’s economic recovery. Businesses that hold assets eligible for the enhanced $150,000 instant asset write-off will have an extra six months, until 30 June 2021, to first use or install those assets.
JobMaker Hiring Credit
The JobMaker Hiring Credit will be available to eligible employers over 12 months from 7 October 2020 for each additional new job they create for an eligible employee. Eligible employers will receive:
- $200 per week if they hire an eligible employee aged 16 to 29 years or
- $100 per week if they hire an eligible employee aged 30 to 35 years
The JobMaker Hiring Credit will be paid quarterly in arrears. It will be available for up to 12 months from the date of employment of the eligible employee with a maximum amount of $10,400 per additional new position created. Employers will need to demonstrate that the new employee will increase overall employee headcount and payroll. To be eligible, the employee will need to have worked for a minimum of 20 hours per week, averaged over a quarter, and received the JobSeeker Payment, Youth Allowance (other) or Parenting Payment for at least one month out of the three months prior to when they are hired.
Mental Health Aid for Small Business Owners
The government will provide $6.5million to support mental health and wellbeing of small businesses impacted by COVID-19. This includes a $4.3million budget commitment to expand current mental health programs for small business owners which will provide small business owners with access to free one on one tele-health sessions with specially trained mental health coaches.
Access to Tax Concessions Extended to Businesses up to $50m
Tax concessions currently available to small business with annual turnover up to $10million have been extended to businesses with turnover up to $50million. These firms will have access to up to 10 small business tax concessions, including deductions of certain start-up and prepaid expenses, exemptions from the 47% FBT tax on car parking and multiple work-related portable electronic devices, such as phones or laptops.
For Individuals
Personal Income Tax Cuts
Stage 2 personal income tax cuts will be brought forward 2 years and backdated to 1 July 2020. Tax brackets will be raised. The upper threshold of the 19% tax bracket will rise from $37,000 to $45,000 and the upper threshold of the 32.5% tax bracket will rise from $90,000 to $120,000. Workers on lower incomes will gain from an extension of the Low and Middle Income Tax Offset for a further 12 months until 30 June 2021 and increase in the Low Income Tax Offset.
Economic Support Payments
Two additional economic support payments of $250 each will be made to aged pensioners, carers, disability support and concession card holders. The payments will be made progressively from 30 November 2020 and early 2021.
Additional 10,000 Places for the First Home Loan Deposit Scheme
An additional 10,000 places will be available for first home buyers under the First Home Loan Deposit Scheme to support the purchase of a new home or a newly built home.
Super Fund Performance Transparency
From 1 July 2021, a new interactive tool (YourSuper) will enable a comparison of simple super (MySuper) products ranked by fees and investment returns. The tool will also provide links to other MySuper products and show current super accounts if the individual has more than one.
As with any Federal Budget there are some winners and some losers, it’s a matter of working out what benefit you will receive from what has been handed down. Speak to us today if we can be of any assistance regarding tax advice or your finances in general.
*source: nab.com.au, knowledgeshop.com.au, abc.net.au
