The Federal Treasurer, Josh Frydenberg, handed down the 2020/21 Federal Budget on Tuesday 6 October 2020.

The key changes that may impact you are set out below:

1.       Personal income tax

The changes that were due to apply from 1 July 2022 will now apply from 1 July 2020, comprising:

  • 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;
  • increasing the maximum Low Income Tax Offset (LITO) from $445 to $700.

2.       Businesses

  • From 1 July 2020, eligible businesses with an aggregated annual turnover of at least $10 million and less than $50 million will be able to immediately deduct certain start-up expenses and certain prepaid expenditure;
  • From 1 April 2021, eligible businesses will be exempt from FBT on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees;
  • Uncapped immediate write-off for depreciable assets
    • Businesses with an aggregated annual turnover of less than $5 billion will be able to claim an immediate deduction for the full (uncapped) cost of an eligible depreciable asset, in the year the asset is first used or is installed ready for use:
      • The asset was acquired from 7:30pm AEDT on 6 October 2020.
      • The asset was first used or installed ready for use by 30 June 2022.
      • The asset is a new depreciable asset or is the cost of an improvement to an existing eligible asset, unless the business has annual turnover less than $50 million, in which case the asset can be second hand.
    • As is currently legislated, businesses with aggregated annual turnover between $50 million and $500 million can still deduct the cost of eligible second-hand assets costing less than $150,000 that are purchased from 2 April 2019 and first used or installed ready for use between 12 March 2020 and 31 December 2020 under the enhanced instant asset write-off. The Government has announced that it will extend the period by 6 months, until 30 June 2021.
    • Small businesses (with aggregated annual turnover of less than $10 million) can deduct the balance of their simplified depreciation pool at the end of the income year while full expensing applies (i.e., up to 30 June 2022).
  • Introduction of a JobMaker Hiring Credit for each additional employee hired aged 16 to 29 years old ($200/week) or 30 to 35 years old ($100/week).

3.       Superannuation

From 1 July 2021, your existing superannuation account will follow you to avoid the creation of a new account when you change employment.

Please feel free to contact us on 1300 885 761 if you have any questions or would like further information in regards to any of the above changes.