As we approach the end of the financial year it’s a good time to start thinking about what you could do to minimise your tax liability.

New items for the 2021 financial year

 The company tax rate for base rate entity companies has reduced to 26% for base rate entities (a drop from 27.5%). From 1 July 2021, the tax rate will drop to 25%.

• In last year’s budget, loss carry-back measures were introduced. This means eligible companies can claim a refundable tax offset using the new loss carry-back measures when they lodge their 2021 financial year tax returns.
• Where your business has claimed JobKeeper & Cash Flow Boost payments throughout the 2021 financial year, ensure that records are kept to prove eligibility.
• Temporary full expensing for asset purchases and instant asset write off: please refer to our detailed summary here.
• Carry-forward unused concessional contributions: individuals can claim an additional tax deduction if a superannuation contribution is made to use up unused concessional contributions from the 2019 and 2020 financial years. Please refer to our detailed summary here.

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If your business has been eligible for the SA Payroll tax waiver over the last 12 months it’s important to note that the month of May is the last month where the payroll tax exemption is available.

Monthly payroll tax payments will resume in July 2021 which means that payroll amounts paid in June WILL be subject to payroll tax (payroll tax payments are based on the previous month payroll).

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Supporting the recovery

Overview

The main themes of Tuesday’s budget was job creation and continued support of economic growth – with an overall goal of reaching an unemployment rate of below 5%.

The Government plans to do this via a raft of infrastructure, business and individual spending packages, along with targeted spending on some specific demographics such as aged care, disability and women.

Funding has been provided for the aged care industry to start the management of matters arising from the Royal Commission. Of the almost $18 billion earmarked for aged care, a large proportion is expected to be spent on the workforce, including the number of aged care workers and increased training and support.

The NDIS has been additionally funded to the tune of approximately $13 billion. There was also a Women’s Budget Statement allocating $3.4 billion to improve the economic security and status of women in Australia.  There will also be significant funds directed to mental health.

The level of spending announced is expected to result in Australia staying in deficit for at least the next 5 years, with net debt approaching $1 trillion.

Importantly, it is expected that the international borders will remain closed until mid-2022, an assumption which underpins the estimates.  Other assumptions made in the budget estimates are widely thought to be conservative which may result in better than expected numbers in the future.

It is widely anticipated this will be the last budget before the next Federal election which puts some of the announced spending into context.  Many of the measures announced will not come into effect until after 1 July 2022 or 1 July 2023 – under the administration of the next government.

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Significant changes from Fair Work Australia came into effect from 27^th March 2021 in relation to casual employment which may impact your business.

The changes have been brought in to further clarify the term “casual” and to help protect both employees and employers. These changes were introduced due to a spark in recent cases where employers were left exposed in relation to the definition/entitlements for casual employees. Please click here for a detailed summary on the changes.

What you need to do will depend on the size of your business.  Following is a brief summary of the changes:

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$4 billion dollar stimulus spend and a focus to create and save jobs

On Tuesday 10 November, the Treasurer of South Australia, Rob Lucas, handed down the 2020-21 SA State Budget.  As expected, the focus of the budget is targeted spending to create and save jobs.  There has been a record spend announced on infrastructure of $16.7 billion along with a $4 billion stimulus spend.  Spending in health, SA Police, education and training, tourism and hospitality and responses to COVID-19 and the bushfire recovery has also been announced.

The budget deficit for last year was $1.49 billion. This year it will increase to $2.59 billion and $1.42 billion next year.  The State Government is hoping to get back to into surplus in 2023-24 financial year.  However, even though the debt will increase significantly, interest costs will be less than previous estimates due to record low interest rates.

For South Australian businesses, announcements were made with regards to payroll tax, Small Business Grants and land tax relief.

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