The Federal Budget was delivered on October 6, 2020 with the Treasurer announcing various tax measures affecting both individuals and businesses. The Government was able to secure passage of legislation containing some of the more important measures, as summarised below.
Tax Relief for Individuals
The Government brought forward ‘Stage two’ of their Personal Income Tax Plan by two years, so that, from 1 July 2020:
- the low income tax offset increased from $445 to $700;
- the top threshold of the 19% tax bracket increased from $37,000 to $45,000; and
- the top threshold of the 32.5% tax bracket increased from $90,000 to $120,000.
In addition, in 2020/21, low and middle-income earners will receive an additional benefit of up to $1,080 from the low and middle income tax offset.
Tax Relief for Business
Businesses with a turnover of up to $5 billion are now able to immediately deduct the full cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022.
The Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid.
Also, businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions.
The expanded concessions will apply in three phases, as follows:
- From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
- From 1 April 2021, eligible businesses will be exempt from FBT on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.
- From 1 July 2021:
- Eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax and settle excise duty and excise-equivalent customs duty monthly on eligible goods.
- Eligible businesses will generally have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.
- The Commissioner of Taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50 million aggregated annual turnover threshold.
Under the changes passed by the Parliament, the Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.
Should you require additional information and advice regarding this complex area please contact our office.
JobMaker Hiring Credit
The JobMaker Hiring Credit is specifically designed to encourage businesses to take on additional young employees and increase employment.
The scheme provides employers with a fixed amount of $200 per week for an eligible employee aged 16 to 29 years and $100 per week for an eligible employee aged 30 to 35 years, paid quarterly in arrears by the ATO.
To be eligible, the employee must have been receiving JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment.
Employees also need to have worked an average of at least 20 hours per week of paid work in a quarter, and can only be eligible with one employer at a time.
The hiring credit is not available to an employer who does not increase their headcount and payroll.
Employers and employees will be prohibited from entering into contrived schemes in order to gain access to or increase the amount payable.
Existing rights and safeguards for employees under the Fair Work Act will continue to apply, including protection from unfair dismissal and the full range of general protections.
Tax-Free Business Support Grants
The Government has announced that the Victorian Government’s Business Support Grants for small and medium businesses, as announced on 13 September 2020, are non-assessable, non-exempt income for tax purposes. The Government may extend this arrangement to similar future grants from all States and Territories on an application basis. Eligibility for this treatment will be limited to grants announced on or after 13 September 2020 and for payments made between 13 September 2020 and 30 June 2021.