October 8, 2020
The Federal Budget was always going to be very different this year compared to previous years. The COVID-19 health crisis continues to have significant impact through risks to health/life, border closures and temproary suspension of economic activity through shut downs and stay at home orders. The federal budget includes measures aimed at continuing efforts by the federal government to provide economic stimulus to support recovery.
Some significant changes for businesses in the 2020/2021 year include:
-> JobMaker Hiring Credit – from 07/10/2020 eligible employers will be able to claim $200 per week for each additional eligible employee they hire aged 16 to 29 years old and $100 for each additional employee they hire aged 30 to 35 years old
-- New jobs created until 06/10/2021 will attract the credit for up to 12 months from the date the new position is created
-- The JobMarker Hiring Credit will be claimed in arrears from the ATO from 01/02/2021
-- Employers will need to report quarterly that they meet the eligibility criteria
-- The amount of credit is capped at $10,400 for each new additional position created
-> Uncapped immediate write-off for depreciable assets:
-- Asset acquired from 7:30pm AEDT on 6 October 2020
-- The asset was first used or installed for use by 30 June 2022
-- The asset can be second-hand or new
-> Temporary loss carry back for eligible companies:
-- Allows a business to carry back a loss from the 2020, 2021 or 2022 income years to offset previously taxed profits made in or after the 2019 income year
-- This will allow such companies to generate a refundable tax offset in the year in which the loss is made
-> FBT exemption for retraining and reskilling employees
-- From 2 October 2020, the Government will introduce an FBT exemption for training and reskilling benefits provided by an employer to redundant, or soon to be redundant, employees, where the benefits may not be related to their current employment. This is designed to encourage employers to assist redundant employees to transition to new employment opportunities within or outside an employer's business, without triggering an FBT liability.
Individual income tax payers can see the following changes:
-> increasing the upper threshold of the 19% personal income tax bracket from $37,000 to $45,000;
-> increasing the upper threshold of the 32.5% personal income tax bracket from $90,000 to $120,000
-> the maximum LITO will be increased $445 to $700
What does this mean? It means that a person with a taxable income of $55,000 in the 2021 financial year can expect to save $1,080 in tax compared to 2020 financial year.
We are here to help. If you require any assistance with understanding how any of this may affect you, please contact us with any questions you may have.
- 2018/19 Year-end Individual Tax Return Checklist
- 2020/2021 Federal Budget
- ALP Key Tax Policies
- ATO warning regarding annual leave loading and OTE
- COVID 19 – Federal Government Support
- Deferred repayments. Is accrued interest on deferred loans tax deductible?
- Fast-tracking tax cuts for small and medium businesses
- Fraud risks in a COVID-19 environment
- How financial advisors can build trust
- How to apply for JobKeeper & Key Dates
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