The message was clear from the Federal Government. They want taxpayers to spend and they want that spending to create jobs. Underlying that, they are hoping the tax cuts, business investment breaks and cash payments will create the confidence required to bring the spending.
There were a number of measures announced in the Federal Budget – following is a summary of the measures that will impact individuals and businesses.
Individual tax cuts
The tax rate cuts that were legislated to come in from 1 July 2022 will now be backdated to apply from 1 July 2020.
The 19% tax rate threshold will increase from $37,000 to $45,000, the 32.5% tax threshold will increase from $90,000 to $120,000. This will put up to an extra $2,565 in the pockets of someone earning over $120,000.
The new low income tax offset will be brought forward to start from 1 July 2020 and the low and middle income tax offset has been retained until 30 June 2021.
Expanded instant asset write-off
Nearly all Australian businesses will be able to write off eligible depreciable assets in the year they are acquired including second hand assets for some businesses. There is no limit on the cost of the asset and the write off will be available until June 2022.
Loss carry-back rules for corporate tax entities
There will be the opportunity for businesses to “carry-back” a tax loss incurred. For example, where a business incurs a tax loss in 2020 and profit in 2019, the 2020 loss can be applied to the 2019 income and a refund of tax paid obtained.
Small business tax changes
Businesses with turnover between $10M and $50M will be able to access some already existing tax concessions previously limited to businesses with turnover up to $10m.
JobMaker Hiring Credit
The JobMaker Hiring Credit of up to $200 per week will be available to businesses who hire an eligible employee. The employee must increase headcount, be currently out of work and aged between 16 and 35 and work at least 20 hours a week.
Apprenticeship wage subsidy
The Government has announced that they will pay half the wages of up to 100,000 apprentices with employers receiving up to $7,000 per quarter until the limit is exhausted. The subsidy will now be available to businesses of any size.
Fringe benefits tax exemption for reskilling employees
There will be an exemption from FBT where an employer provides retraining to an employee where the benefit is not related to their current role. There was an expansion of some other FBT exemptions for businesses including car parking, the provision of multiple devices and some record keeping changes.
- Infrastructure injection in SA – including South Road duplication, Strzelecki Track and South Eastern Freeway upgrades and Hahndorf access upgrade.
- Additional $500 payment (2 x $250) to pensioners and others on social security.
- CGT exemption for granny flat arrangements.
- Extension of the First Home Loan Deposit Scheme.
- Changes to the Research and Development Incentive from 1 July 2021.
- Manufacturing boost for specific industries.
The impact of these measures will be discussed in more detail next week at our Webinar. Click here for details.
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