Federal Budget 2020 Snapshot

The Treasurer delivered the Federal Budget last week setting a scene for a slow road to surplus. The government is spending big on infrastructure, job creation and personal income tax cuts. Some of the key highlights that might be relevant to you are listed below:

For Individuals

Personal Income Tax Cuts

The Government will bring forward the second stage of its Personal Income Tax Plan by two years to 1 July 2020 while retaining the low and middle tax offset for the financial year 2021.It has also brought forward the stage two of the original plan originally proposed to take effect from 1 July 2022 to now apply from 1 July 2020. The tax rates for the 2021 financial are listed below:

Income Bracket	Tax Rate
Nil-$18,200	0%
$18,201 to $45,000	19%
$45,001 to $120,000	32.5%
$120,001 to $180,000	37%
$180,000 plus	45%

 

Two additional economic support payments of $250 to pensioners and other eligible recipients, worth $2.6bn.

Extension of the coronavirus supplement until 31 December 2020 at a rate of $250 per fortnight from 25 September 2020.

An additional 10,000 places in first home loan deposit scheme in 2020-21 to support the purchase of a new home or a newly built home.

Australians will automatically keep their superannuation fund when they change employers, stopping the creation of unintended multiple accounts. A new online YourSuper comparison tool will help people compare the performance of funds which will be required to meet an annual performance test.

A targeted capital gains tax exemption for granny flat arrangements where there is a formal written agreement, applying to arrangements with older Australians or those with a disability.

For Businesses

Loss Carry-Back for companies

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.

JobKeeper Extension

Extension of the JobKeeper payment support for a further six months until 28 March 2021.

Extension of Apprenticeship Wages

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.

Instant Asset Write-Off

The instant asset write-off is being made even more generous and temporarily extended. From 7:30pm (AEDT) on 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.

FBT Changes

Exempting from the 47% fringe benefits tax employer-provided retraining activities to employees who are redeployed to a different role in the business.

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. Treasury estimates that this will support around 450,000 jobs for young people.

Extension of 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.

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.

The cap on eligible R&D expenditure will be lifted from $100 million to $150 million per annum. These changes apply from 1 July 2021 and are expected to support more than 11,400 companies that claim the incentive.

Training

Funding for online short courses to upskill workers and unemployed Australians in teaching, health, science, information technology and agriculture.

Victorian Government Business Support Grants

Victorian Government’s business support grants paid between 13 September 2020 and 30 June 2021 will be treated as non-assessable, non-exempt (NANE) income.  This may also be extended to other States for similar support grants made.

 

Please feel free to contact your trusted advisor at Vivid Partners should you have any questions about how these measures will affect you.

Vivid Partners
08 6270 2876
info@vividpartners.com.au

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Vivid Partners. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your advisor at Vivid Partners.