With the Spring Carnival well and truly at the pointy end, Scomo and Junior Burger have put Kirribilli House on you to spend like there is no tomorrow (as they will), after the announcement of the 2021 Federal Budget.

Cynics will say the forecast debt, a nose short of $1 trillion (2024), is irresponsible.

Economists will say it’s not the size of the debt that matters…. It’s the cost.

m+h Private will say here are the Budget Best Bits…

Capital Assets – 100% write off

Under the proposed new rules, businesses with turnover under $5b will be entitled to deduct 100% of the full cost of new capital assets acquired from 6 October 2020 and installed ready for use by 30 June 2022. Think motor vehicles, plant & equipment … no horses.

This includes improvements to existing eligible assets.

For businesses with turnover under $50M the, 100% deduction also extends to second-hand assets.

Note the $150K instant write off still remains for business with turnover of up to $500M for second-hand assets installed ready for use before 31 December 2020.

Loss Carry-Back

Carry back tax losses like it’s 2013.

This concept was first introduced in 2013. Under the new rules, companies will be permitted to ‘carry-back’ a tax loss in the 2020 to 2022 financial year and offset tax paid on profits from the 2019 financial year onwards. This should result in a tax refund.

Lower Tax (individuals)

The individual tax brackets are on the decline with immediate tax relief provided for income earners up to $200K. Tax relief ranging from $1,060 - $2,565.

Larger tax cuts are planned in the 2024-25 financial year with the reduction of the 32.5% bracket down to 30% and the removal of the 37% bracket, meaning income earners up to $200K will be taxed at 30% also. Above $200K will remain at 45%.

JobMaker Hiring Credit

If you thought the marketing department was done with “Job” think again.

The hiring credit will be available to employers for new jobs they create over the next 12 months from 7 October 2020.

For each eligible employee, employers will receive the amount below for a period up to 12 months:

$200 a week if they hire an eligible young person aged 16 to 29 years; or
$100 a week if they hire an eligible young person aged 30 to 35 years.

To receive the credit employers must report their wages to the ATO via single touch payroll.

Apprentice Wage Subsidy

A new subsidy accessible for all businesses.

Available for apprentices that commence from 5 October 2020 to 30 September 2021. Businesses will be reimbursed 50% of the apprentices wage up to $7K per quarter.

Note this is capped at 100,000 places. Further details are to be released in relation to the administration and how the places will be allocated to businesses.

Residential construction industry

The proposed changes extend the First Home Loan Deposit Scheme to provide an additional 10,000 guarantees in 2021, to allow first home buyers purchase a new home with a deposit of 5%.

FBT

Car parking

Say goodbye to Fringe Benefits Tax on car parking for businesses with turnover up to $50M.

Note the exemption only applies where the car park is not in a ‘commercial parking station’. I.e. car parking station that charges a fee for all-day parking.

Electronic devices

Under the proposed changes SME businesses can provide multiple work-related electronic devices to employees without triggering FBT implications. Current law generally permits one per FBT year.

Only time will tell whether or not Scomo can canter through this current financial crisis, but in the mean time the government has laid out a buffet of Black Caviar to tempt your tastebuds.

Stay safe. Shake tax, not hands!

Get in touch with m+h Private tax specialists today on +61 3036 7174 if you need support for you and your business.

As always, the above is general in nature, and the details may change, please discuss with your trusted advisor.

2021 Budget Best Bits