Federal Budget 6 October 2020 tax measures

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Category Budget measure
Covid-19 economic response

Key Federal Government tax or granted related programmes forming a part of the economic response are:
  1. Homebuilder grants for owner-occupiers;
  2. Business support for new apprentices and trainees;
  3. JobTrainer fund wage subsidy;
  4. Cash Flow Boost to businesses;
  5. Regional business support for severely affected regions and communities;
  6. Early access to superannuation; and
  7. JobKeeper payments to business extended to 28 March 2021.
The total economic support is approximately $289 billion or 14.6% of GDP as reported 23 July 2020.
Individuals
  1. Personal tax cuts scheduled for 2022 will be retrospectively brought forward to 1 July 2020. The 19% tax bracket will increase from $37,000 to $45,000 and the 32.5% tax bracket will increase from $90,000 to $120,000. Further tax cuts to be available from 1 July 2024 unless brought forward.
  2. The low and middle-income tax offset will remain in place for a further year.
Families
  1. The low and middle-income tax offset will remain in place for a further year.
  2. Business continuity payments of 50% to childcare providers
Retirees & Pensioners
  1. Age Pensioners and Commonwealth Seniors Health Card holders received two $750 economic support payments
  2. Age Pensioners will receive a further $250 in December 2020 and $250 in March 2021
Small to Medium Businesses
  1. For businesses up to $5b in turnover, losses in 2020-2021 and 2021-2022 can be offset from profits in 2018-2019 and later tax years. The business can elect a tax refund when the tax return is lodged. If a franking deficit will arise, the loss carry back is limited to avoid the franking deficit.
  2. From 1 July 2020, eligible businesses can take advantage of immediate deductions for eligible start-up expenses and pre-paid expenses
  3. from 6 October 2020 until 30 June 2022, for businesses up to $5b in turnover, unlimited instant asset write-off of for eligible in-use depreciating assets (including 2nd hand assets). The deduction is claimable in the year the asset is in use.
  4. From 7 October 2020 until 6 October 2021, JobMaker hiring credit for jobs created. $200/wk for 16-29 year olds and $100/wk for 30-35 year olds for up to 12 months from the date the new position is created. Eligible workers were on JobSeeker, Youth Allowance or the Parenting Payment for 1 of the previous 3 months at the time of hiring. The credit is claimable in arrears from 1 February 2021. Specific employer eligibility criteria apply and different rules will apply to new businesses
  5. From 1 April 2021, FBT on carparking and work-related portable devices to be removed
  6. From 1 July 2021, for research claims below $20m, the R & D Tax Offset will increase to the company tax rate + 18.5% with no cap on annual refunds
  7. From 1 July 2021, simplified trading stock rules apply
  8. From 1 July 2021, PAYG instalments to be based on GDP adjusted notional tax
  9. From 1 July 2021, excise duty and excise-equivalent customs duty to be payable monthly on eligible goods
  10. From 1 July 2021, a 2 year amendment period will apply for income tax assessments from this date
High Net Worth & Multinationals
  1. The Federal Government will support the recovery from COVID-19 by modernising and expanding the tax treaty network to eliminate double taxation, settle taxing rights between Australia and other countries and attract foreign investment and skilled workers
  2. From 1 July 2021, for research claims above $20m, the Research and Development Tax Incentive will increase to the company tax rate + 8.5% for initial expenditure up to 2% R & D intensity and 16.5% for R & D expenditure above 2% R & D intensity with a cap of $150m/year
SMSFs
  1. From 1 July 2021, superannuation contributions increase from 9.5% to 10% (no change announced)
  2. No new automatically created super accounts. Your fund will follow you if you change employment
  3. A 'Yoursuper' comparison tool will be created
  4. An annual performance test will be introduced for super funds

Disclaimer: This webpage was last updated on 6 October 2020. The information in this document is provided for general information and reflects our understanding of the Federal Budget measures as at the date of publication from information provided. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on your specific circumstances.


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