Budget 2020
The Federal Treasurer, Josh Frydenberg, handed down the 2020/21 Federal Budget on 6th October 2020. The Federal Budget aims to assist job creation, investments and household spending through significant personal income tax cuts, incentives for businesses employing new staff under 35 and immediate write off for any eligible business asset purchases.
Income Tax Cuts
Personal income tax cuts will flow through to more than 11 million taxpayers. The changes are worth an estimated $1,080 per year for people earning between $45,000 to $90,000 and up to a maximum of $2,430 per year for people earning more than $120,000.
Sole Traders will also benefit from the unincorporated tax discount of $1,000. These tax cuts will be backdated from 1 July 2020, resulting in the extra money being returned to bank accounts as soon as the legislation has passed through Parliament.
Those people currently receiving Government payments, including Aged Pensions, Carer Payments and Family Tax Benefit will receive two $250 cash payments in December 2020 and March 2021.
In addition, a one-off $1,500 pandemic leave payment will be made to eligible individuals who are unable to work while under direction to self-isolate, quarantine, or who are caring for someone who has tested positive for COVID.
Superannuation
As at July 2021, the Australian Prudential Regulation Authority (APRA) will conduct benchmarking tests on the net investment performance of MySuper products and will prohibit underperforming products from receiving new members to funds.
Individuals will now keep their existing superannuation fund when they change jobs and the new employer will pay super into the employees existing fund, rather than creating a new account.
Superannuation Trustees will be required to comply with a new duty to act in the best financial interests of all fund members.
Job Creation
A JobMaker Hiring Credit has been created as a 12 month wage subsidy for businesses that hire 16 to 35 year olds for at least 20 hours per week, who are on JobSeeker. This subsidy will be $200 per week for those under 30 and $100 per week for those aged 30-35. JobMaker hiring credits will be reported using Single Touch Payroll.
Businesses that hire new apprentices will also be eligible for a 50% wage subsidy, supporting over 100,000 apprentices available to business of all sizes.
Business Investment
There is an extension of the Instant Asset Write-off out to June 2022, allowing for immediate depreciation on eligible assets, with no cap on the value of these assets.
Small companies with an annual turnover of less than $20 million will have R&D tax offset capped at 18.5 percentage points above the claimants’ company tax rate and there will be no cap on annual cash refunds.
Companies will now be able to offset losses incurred to June 2022 against prior profits made in or after the 2018/2019 financial year.
The budget also brings additional funding to national level infrastructure projects of over $7.5 billion in an effort to boost the Australian economy.
Should you have any queries that you would like to discuss, please contact your Advisor at 360Private on 8291 2111