The government has handed down the 2020-21 Federal Budget after a postponement because of the coronavirus pandemic. The announced measures will affect individuals and businesses.
Proclaimed as the most significant Federal Budget in decades, Treasurer Josh Frydenberg stated it would focus heavily on measures to pull Australia out of the most severe global economic crisis since the Great Depression.
With uncertainty remaining until a vaccine for COVID-19 is available, we can expect more announcements as circumstances change.
So what are the key announcements in this year’s Federal Budget?
Federal Budget measures affecting Individuals
Personal tax cuts
In 2020-21, lower and middle-income earners will receive a tax cut up to $2,745 for singles or up to $5,490 for dual-income families, compared with 2017-18 tax year. Treasury expects most of the tax reliefs will benefit those on incomes below $90,000. The Budget tax fact sheet shows the tax relief comparison table.
If you want to be prepared for your next tax return, read our simple tips to maximise your allowable deductions.
Aged, family and disability welfare recipients
Aged, carer, family and disability welfare recipients will receive two $250 payments. The payments will be made in December and March.
The government will provide funding for 23,000 new home care packages. There are also commitments across several other areas, such as for the homeless, investment in dementia care, health, tourism, first home buyers and the environment.
Under the government’s latest reforms to super, superannuation will now be linked to employees. It moves with them to stop the creation of unintended multiple accounts. An online tool called YourSuper will give people the ability to compare funds.
Extended paid parental leave
Parents will now qualify for the payment if they have worked 10 of the 20 months before giving birth or adopting. This is a change from 10 of the past 13 months.
Federal Budget measures affecting Businesses
Extended instant asset write-off
Businesses with turnover up to $5 billion will be able to write off the full cost of eligible depreciable assets of any value in the year they are first used or installed ready for use. The cost of improvements made during this period to existing eligible depreciable assets are also fully deductible.
Small business loss carry-back
Until 30 June 2022, companies with turnover up to $5 billion will be able to offset tax losses against previous profits and tax paid in or after 2018-19 financial year.
Expanded small business tax concessions
The amendment of the small business turnover threshold from $10 million to $50 million will allow medium-sized businesses to access up to 10 further small business tax concessions.
The concessions include immediate deductions for certain start-up expenses and certain prepaid expenditure from 1 July 2020. From 1 April 2021, FBT exemption on car parking and multiple work-related devices provided to employees, such as laptops, phones, or tablets.
You can use this ATO guide to find out what concessions you can access.
Research and Development (R&D)
For small claimants with turnover less than $20 million, the refundable R&D tax offset will increase to 18.5 percentage points above the claimant’s company tax rate. These changes apply from 1 July 2021. The government expects the additional incentive will support over 11,400 companies that claim the incentive.
Employers and young workers
The JobMaker hiring credit is aimed at increasing employment for young people aged 16-35 years. Employers who demonstrate an increase in overall employment will receive a credit for 12 months for eligible employees.
Apprenticeships and trainees
Businesses will receive a 50% wage subsidy, up to a cap of $7,000 per quarter, for commencing apprentices and trainees until 30 September 2021. The government will spend $252 million over two years to support the delivery of 50,000 higher education short courses in areas including teaching, health, information technology, science and agriculture.
$50 million will go to a Regional Tourism Recovery initiative to support tourism operators market to a domestic audience.
The budget promises $2 billion for concessional loans to help farmers recover from drought. There are also plans for improved water infrastructure and support for exporters.
The government has committed to spend an additional $14 billion for new and accelerated projects in Australia over the next four years.
For more details on the 2020-21 Federal Budget, download the Budget Overview.
If you would like to know how this year’s Federal Budget will impact you or your business, book a time to talk to us.