The Government has announced that it proposes to fast-track Stage 2 of it's Personal Income Tax Plan detailed in last year's budget with the plan to start from 1 July 2020 rather than 1 July 2022.
The revised plan includes:
- increasing the low income tax offset from $445 to $700;
- increasing the top threshold amount of the 19 per cent bracket from $37,000 to $45,000;
- increasing the top threshold amount of the 32.5 per cent bracket from $90,000 to $120,000.
The Government will also provide a further year for the low and middle income tax offset (LMITO) which was due to be removed at the commencement of Stage 2. The one-off additional LMITO is worth up to $1,080 for individuals.
The proposed personal income tax rates from 1 July 2020 to 30 June 2022 are as follows:
The tax cuts will be reflected in the PAYG Withholding rates once the legislation is passed so employees will receive the benefit immediately.
There have been no announced changes to Stage 3 of the Personal Income Tax Plan which is scheduled to start in the 2024-25 income year.
For the 2021 income year, the Medicare levy low-income thresholds will be increased to:
* Note this increases the relevant threshold above
Two additional tax-free payments of $250 each will be made to eligible recipients.
The payments will be made in November 2020 and early 2021 to recipients of the following Government payments and health care card holders:
- Age Pension
- Disability Support Pension
- Carer Payment
- Family Tax Benefit
- Double Orphan Pension
- Carer Allowance
- Pensioner Concession Card
- Commonwealth Seniors Health Card
- Veterans' Affairs Payments
- Veterans' Affairs Concession Card
The Government has extended the instant asset write off, allowing businesses with a turnover less than $5 billion to immediately write off the full cost of eligible assets acquired from 7.30pm 6 October 2020 and first used by 30 June 2022. This applies to new depreciating assets with no threshold cap on the value of the asset.
Small and medium businesses are also able to immediately write off second-hand assets.
Please note if purchasing a car for business use, the purchase may be subject to the depreciation car limit which is currently $59,136 for the 2020-21 year.
Larger businesses, with turnover greater than $50 million, are only able to immediately write off eligible second-hand assets purchased by 31 December 2020. From 1 January 2021 to 30 June 2022, the assets for these larger businesses must be new.
||Date range for when asset first used or installed ready for use
|< $5 billion aggregated turnover
||7.30pm on 6 October 2020 to 30 June 2022
|< $500 million aggregated turnover
||12 March 2020 to 31 December 2020
|< $50 million aggregated turnover
||7.30pm on 2 April 2019 to 11 March 2020
|< $10 million aggregated turnover
|| 29 January 2019 to 7.30pm on 2 April 2019
Small businesses (aggregated turnover less than $10 million) can deduct the balance of their small business general pool at the end of the 2021 income year.
The Small Business Entity (SBE) turnover threshold will be increased from $10 million to $50 million.
As such, businesses with an aggregated annual turnover of less than $50 million will have access to the below 10 small business tax concessions. These concessions will be delivered in three phases.
- From 1 July 2020, these businesses will be able to immediately deduct
- Certain start-up expenses, and
- Certain prepaid expenses
- From 1 April 2021, these businesses will be exempt from FBT on the following benefits provided to employees
- Car parking
- Multiple work-related portable electronic devices, like phones or laptops.
- From 1 July 2021, these businesses will be entitled to
- Use the simplified trading stock rules
- Remit PAYG instalments based on GDP adjusted notional tax
- Settle excise duty monthly on eligible goods
- Settle excise-equivalent customs duty monthly on eligible goods
- A 2-year amendment period for income tax assessments starting from 1 July 2021, and
- Use a simplified accounting method determination for GST purposes
For all other small business tax concessions, the eligibility turnover threshold will remain at their current levels.
The Government will amend the tax law to allow eligible companies to carry back tax losses to be used against profits taxed in a previous year. The tax losses from the 2020, 2021 or 2022 financial years will be allowed to offset profits taxed in the 2019 or later financial years.
Eligible companies are corporate tax entities with an aggregated turnover of less than $5 billion. These companies will receive a refundable tax offset in the year they made a loss, and they elect to use this mechanism when they lodge their 2021 or 2022 tax return. The losses carried back must not be more than earlier taxes profits and must not result in a franking account deficit.
Any tax losses that are not fully offset against previous taxed profits, or not elected to be used, will be carried forward as normal.
||The Government will introduce the JobMaker Hiring Credit, which will be available to eligible employers for each additional new job they create for eligible employees from 7 October 2020. The JobMaker Hiring Credit will be paid to employers over 12 months.
Eligible employers will receive the credit if they can demonstrate that the new employee increases their overall employee headcount and payroll when compared to the 3 months ending 30 September.
The credit that is available is either;
- $200 per week if the eligible employee hired is aged 16 to 29 years, or
- $100 per week if the eligible employee hired is aged 30 to 35 years
Eligible employees need to work a minimum of 20 hours a week, as an average over the quarter, and have been a recipient of either the JobSeeker Payment, Youth Allowance (other) or Parenting Payment for at least one month out of the three months prior to being hired.
The credit is to be claimed each quarter from the ATO, starting 1 February 2021. Each quarter, the employer will need to report that they meet the eligibility criteria.
The credit is also available to newly established businesses and businesses that had no employees on 30 September 2020. For these businesses, the first employee hired will not be eligible to receive the credit, but the second and subsequent hires will be eligible for the credit.
The Government will provide a 50% wage subsidy to businesses who engage a new or recommencing Australian apprentice from 5 October 2020, until the cap of 100,000 apprentices is reached. It is not available for employers that took on an apprentice prior to 5 October 2020.
The subsidy will be available for wages paid from 5 October 2020 to 30 September 2021, to a maximum of $7,000 per quarter ($28,000 per annum). The subsidy will be available to all employers, regardless of size or industry, up to the 100,000 cap.
The apprentice or trainee must be undertaking a Certificate II or higher qualification and must have a training contract that is formally approved by the state training authority.
The subsidy is not available for any apprentice receiving any other form of Australian Government wage subsidy, such as Supporting Apprentices and Trainees or JobKeeper.
An eligible employer should advise of their intent to claim Boosting Apprenticeship Commencements using the Boosting Apprenticeship Commencements Registration Form during sign up of a new Australian Apprentice. The form will be available from your Australian Apprenticeship Support Network provider.
First claims for the subsidy will be available from 1 January 2021, with payments made quarterly in arrears.
The Government has announced further enhancements to its Research and Development (R&D) incentive to enable further investment in Australia and help businesses manage the economic impacts of the COVID-19 pandemic.
Small companies with an aggregated annual turnover of less than $20 million will have access to a refundable R&D tax offset of 18.5 per cent above their company tax rate, whilst the $4 million cap on annual cash refunds will be abolished.
Larger companies with an aggregated annual turnover of $20 million or more, will have a reduction in the number of intensity tiers from three to two. The R&D premium ties the rate of the non-refundable R&D tax offset to an entity's incremental R&D intensity, being R&D expenditure as a proportion of total expenses for a given year.
For larger entities, the marginal R&D premium will be the claimant's tax rate plus:
- 8.5 percentage points above the claimant's company tax rate for R&D expenditure between 0 percent and 2 per cent R&D intensity
- 16.5 percentage points above the claimant's company tax rate for R&D expenditure above 2 per cent R&D intensity
This program is for income years starting on or after 1 July 2021.
An FBT exemption will be apply to retraining and reskilling benefits provided by employers to redundant, or soon to be redundant, employees even if that training is not related to their current employment. Under previous legislations, FBT would be payable on such payments if they were not sufficiently connected to the employee's current employment.
The FBT exemption is not available on salary packaging arrangements or on Commonwealth supported places at universities, and does not extend to repayments towards student loans. The exemption will apply from of 2 October 2020, the date of the announcement.
|| In an aim to reduce FBT compliance burden, employers will be allowed to rely on their existing corporate records when preparing FBT returns. There will no longer be a need to complete additional employee declarations and other records that are currently prescribed. This will take effect from the start of the first FBT year after the enabling legislation receives Royal Assent.
The Export Market Development Grants (EMDG) Scheme is a financial assistance program available to small and medium-sized exporters. To encourage Australian businesses to develop export markets, the scheme reimburses up to 50% eligible expenses related to promotion of exports.
The Government announced that from 1 July 2021, they plan to simplify and restructure the scheme after feedback from an independent review of the scheme. The application process and administration is also looking to be simplified, with the scheme shifting away from a reimbursement model to a grant scheme. The new program will apply to businesses with turnover less than $20 million.
The Government will provide a capital gains tax exemption on granny flat arrangements that provide accommodation for older Australians or those with a disability, where there is a formal written agreement in place. This is expected to be implemented as of 1 July 2021. The exemption does not apply to commercial rental agreements, only arrangements between family members, or people with other personal ties.
The Government has announced reforms that will reduce regulatory burden to support customers and businesses affected by COVID-19 to ensure a timely flow of credit and resolution. Measures include:
- introducing a new process to enable eligible incorporated small businesses in financial distress to restructure their own affairs;
- streamlining the liquidation process for eligible incorporated small businesses;
- providing support for the insolvency sector;
- introducing a standard licensing regime for debt management firms who represent consumers in dispute resolution processes with credit providers;
- harmonising responsible lending obligations between different standards and guidance for authorised deposit-taking institutions (ADIs) and establish a similar new credit framework for non-ADIs; and enhancing the regulation of Small Amount Credit Contracts and Consumer Leases to ensure that the most vulnerable consumers are protected.
|The Government has announced a Your Future, Your Super package encompassing a number of changes to the superannuation system designed to save Australians $17.9 billion over 10 years.
- ATO to develop a tool to enable new employees to select from a comparative table of MySuper products through the YourSuper portal;
- provide a means to eliminate the unintentional creation of a new superannuation account when employees change jobs;
- benchmarking the performance of MySuper products, with products that have underperformed over two consecutive annual tests prohibited from receiving new members until a test shows they are no longer underperforming; and
- improving the accountability and transparency of superannuation funds by strengthening obligations on superannuation trustees to ensure their actions are consistent with members' retirement savings being maximised.