By Michael Walsh, CEO, Walshs

COVID-19 has had a profound impact on individuals and businesses and the flow-on effects will likely be felt for some time. The Federal Budget 2020 includes a range of benefits and incentives, which hopefully will assist Australia to have a speedy recovery from our current economic position.

Updates for individuals:

  • Reductions in individual tax rates will apply for the 2020-2021 income year with tax cuts to be backdated from 1 July 2020 (Previously meant to commence 2022-2023 income year):
    • The top income threshold for the 19% tax rate will increase from $37,000 to $45,000
    • The top income threshold for the 32.5% tax rate will increase from $90,000 to $120,000.
  • Granny flat arrangements will be exempt from CGT where there is a formal written agreement. The exemption will apply to arrangements with older Australians aged 65 and over, and those with a disability. These exemptions will apply from the first income year after the date of Royal Assent of the legislation.
  • First home buyers will be eligible with a deposit of at least 5 percent with the purchase cap being lifted from $750,000 to $950,000.
  • Aged pensioners will receive two payments of $250 with the first payment to be made in December and the other in March 2021.

Updates for businesses:

  • Small business entity concessions:
    • The turnover threshold for businesses to be eligible for some small business concessions will be increased from $10 million to $50 million
    • The FBT exemption will apply for employers who provide retraining and reskilling benefits to employees facing redundancy (effective 6 October)
    • Eligible small businesses will be exempt from the 47% fringe benefits tax on car parking and multiple work-related portable electronic devices including mobile phones and laptops provided to employees (from 1 April 2021)
    • The ATO will only have a 2-year period to amend small business income tax assessments – currently the ATO has 4-years to amend this (from 1 July 2021).
  • Temporary full expensing of eligible capital assets:
    • Businesses with aggregated annual turnover of less than $5 billion will be able to deduct the full cost of eligible capital assets in the year they are first used
    • Full expensing will apply to new depreciating assets, the cost of improvements to existing eligible assets, and for small and medium-sized businesses. The concession will also apply to second-hand assets
    • Full expensing deductions will apply to eligible capital assets (acquired from 7.30pm, 6 October 2020 or installed by 30 June 2022)
    • Businesses that hold assets that are eligible for the existing $150,000 instant asset write-off will have an extra 6 months until 30 June 2021, to first use or install those assets (purchased after 20 March 2020).
  • Companies and temporary loss carry-back (concession not applicable to sole traders, partnerships or trusts):
    • Eligible companies will be allowed to carry back tax losses from the 2019-2020 or 2020-2021 income years to offset previously taxed profits in 2018-2019 or later income years
    • This concession will provide a refundable tax offset in the year in which the loss is made
    • The tax refund will be made available when the eligible business lodges their 2020-2021 and 2021-2022 tax returns
    • Companies that do not elect to carry back losses under this concession can still carry tax losses forward.
  • JobMaker:
    • The hiring incentive will be $200 per week for workers aged 16 to 29 and $100 a week for workers aged 30-35 (up to $10,000pa)
    • The hiring credit is available to businesses up to the first 12 months of a worker’s employment. The new employee/s must work for at least 20 hours a week and the business must show an increase in overall headcount
    • The employee must have been receiving JobSeeker, Youth Allowance or a parenting payment for at least one of the previous three months at the time of hiring
    • Jobs created from 7 October 2020 will be eligible however employers will have to make claims in arrears on a quarterly basis (from 1 February 2021)
    • The hiring credit scheme will close to new entrants from 7 October 2021.

As always, should you have any questions or wish to discuss how these updates might affect you or your business, please contact us at Walshs on 07 32215677 or email enquiries@walshs.com.au.