Australian Federal Budget 2020-21

The 2020/2021 Federal Budget sees a record $213.7 Billion deficit and net debt predicted to peak at $966 Billion (44% GDP) by June 2024. 

Here are key items that would affect the businesses:

1. Accelerated Personal tax cuts

Government brings forward “Stage 2” tax cuts to 1 July 2020. In 2020-21, low and middle-income earners will receive tax relief of up to $2,745 for singles, and up to $5,490 for dual income families, compared with 2017-18 settings. Most of the benefit will go to those on incomes below $90,000.

2. Extended instant asset write-off

The instant asset write-off is being made even more generous and temporarily extended. From 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.

3. Small business loss carry back

Companies with turnover up to $5 billion will be allowed to offset losses against previous profits on which tax has been paid, to generate a refund. Eligible companies can carry back tax losses from the 2019-20, 2020-21 or 2021-22 income years to offset previously taxed profits in 2018-19 or later income years. Companies may elect to receive a tax refund when they lodge their 2020-21 and 2021-22 tax returns.

4. Additional R&D incentives

An additional $2 billion is being invested through the Research and Development Tax Incentive. For small claimants (turnover less than $20 million), the refundable R&D tax offset will increase and there will be no cap on annual cash refunds. For larger claimants, the intensity test will be streamlined and the non-refundable R&D tax offset will be increased.

5. Expanded small business tax concessions

Amendments will allow businesses with less than $50 million aggregated annual turnover (up from $10 million) to access up to 10 small business tax concessions.

6. Super reforms

Under the Government’s latest reforms to super, employers will effectively stop offering a default fund and superannuation funds will be required to meet an annual performance test under guidance from APRA. The Government will also establish an online comparison tool known as ‘YourSuper’.

7. Jobmaker hiring credit

The $4 billion JobMaker Hiring Credit will be payable for up to 12 months for each new job and is available from 7 October 2020 to employers who hire eligible employees aged 16-35.The Hiring Credit will be paid quarterly in arrears at the rate of $200 per week for those aged between 16-29, and $100 per week for those aged between 30-35. Eligible employees are required to work a minimum of 20 hours per week. To be eligible, employers will need to demonstrate an increase in overall employee headcount and payroll for each additional new position created. 

8. New apprenticeships and trainees

Businesses that take on a new apprentice or trainee will be eligible for a 50% wage subsidy starting 5 October 2020. But the subsidy is capped at 100,000 workers. The $1.2billion subsidy will be available to employers of any size or industry.

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