In Tuesday night’s budget, the Government announced several stimulus measures to help the economy recover from the COVID 19 recession, these measures include:
Stage 2 of the personal income tax plan that was first announced in last year’s budget has been fast tracked (these changes were originally due to start in the 2022-23 financial year). The changes include increasing the low income tax offset from $445 to $700, moving the top of the 19 cent tax bracket from $37,000 to $45,000 and the top of the 32.5 cent tax bracket from $90,000 to $120,000.
In due course, the ATO will release new PAYG Withholding tax tables, then you can expect your payroll software to release an update to reflect the changes.
Whilst these changes were backdated to 1 July 2020, they still need to be passed by the Senate. This means their effect won’t be felt for a little while, even though the Opposition has indicated it will support the initiative.
Temporary Full Expensing of Assets
A new measure known as temporary full expensing was introduced. This allows businesses with a turnover of less than $5 billion to immediately deduct eligible assets (of any value) purchased between 7.30pm on 6 October 2020 and 30 June 2022. The asset value was previously capped at $150,000 per asset.
Temporary Loss Carry-back
The government is also proposing to allow companies with annual turnover of $5 billion or less to offset tax losses against profits made in previous years. Tax losses incurred in the financials years ended June 2020, June 2021 & June 2022 can be applied against profits made in financial years ended June 2019 onwards. We will provide more detail in due course.
This was introduced to encourage the creation of new jobs. The Government is offering $200 for each new employee aged between 16 – 29 years and $100 per week for each new employee aged between 30 – 35 years of age where the new employee previously received JobSeeker, Youth Allowance or Parenting Payments. To be eligible for JobMaker, the overall number of employees in your business must increase.
If you wish to find out further information regarding any of these measures please do not hesitate to give our office a call. Otherwise, once these measures are legislated, we will post further updates.
– David Gorman & Renee Crane
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.