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2020/21 Federal Budget

Personal income tax changes

-Changes to personal income tax rates

The Government has announced that it will bring forward changes to the personal income tax rates, which were due to apply from 1 July 2022, so that these changes now apply from 1 July 2020 (for the 2021 income year)

Please see the below table with these changes

-Changes to the Low Income Tax Offset (LITO)

The government announced that it will also bring forward the changes that were proposed to the LITO from 1 July 2022, so they will now apply from 1 July 2020 (for the 2021 income year)

Please see the below table with these changes

The Government also announced that the current Low and Middle Income Tax Offset (LAMITO) would continue for the 2022 income year (which is available in addition to the LITO for eligible tax payers) for example LAMITO of $1,080 will be available to taxpayers with taxable income between $48,000 and $90,000 in the 2021 income year.

Changes affecting business taxpayers

-JobMaker Hiring Credit

As we mentioned in our last email, the Government will introduce a JobMaker Hiring Credit as an incentive for businesses to take on additional young job seekers.

From 7 October 2020, eligble employers will be able to claim $200 a week for each eligible employee they hire aged 16 to 29 years old and $100 a week for each additional eligible empoloyee aged 30 to 35 years old. New jobs created until 6 October 2021 will attract the credit for up to 12 months from the date the new position is created. The JobMaker Hiring Credit will be claimed quartley in arrears by the employer from the ATO from 1 February 2021.

-Who is an eligible employee?

Employees on a permanent, casual or fixed term basis, to be an eligible employee the employee must be ages 16 to 29 years of age (at the time of their employement started, to attract $200 per week or 30 to 35 years to attract the $100 per week). They need to have worked at least 20 hours per week on average for the full weeks they were emplopyed over the reporting period. Employees needed to have commenced their employment during the period from 7 October 2020 to 6 october 2020. Employees needed to have received JobSeeker, Youth Allowance (other) or Parenting Payment for at least one month within the past three months before they were hired.

-Tax-free business support grants

The Government has announced that the Victorian Government’s Business Support Grants are exempt from income tax, they are non assessable income to your business.

-Uncapped Immediate write-off for depreciable assets

Businesses with an aggregated annual turnover of less than $5 billion will be able to claim an immediate deduction for an asset acquired from 7:30pm AEDT on 6 October 2020 (Budget night). The asset needs to be first used or installed ready for use by 30 June 2022, the asset can also be second hand.

Changes affecting companies

-Temporary loss carry back for eligible companies

The Government has announced that it will introduce measures to allow companies with turnover of less than $5 billion to carry back losses from the 2020, 2021 or 2022 income years to offset previously taxed profits made in or after the 2019 income year.

Supporting the mental health of Australians in small businesses –COVID-19 response package

The Government will provide 7 million in 2020/21 to support mental health and finanical wellbeing of small businesses impacted by COVID-19, including:

-4.3 million to provide free, accessible and tailored support for small businesses owners by expanding Beyond Blues NewAccess program in partnership with the Australian Small Business and Family Enterprise Ombudsman

-2.2 Million to expand free accredited professional development program that builds mental health literacy of trusted business advisors so they can better support small businss owners in times of distress.

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