Blog Layout
2020/21 Federal Budget Highlights
Dawson & Partners • Oct 26, 2020
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).
- 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:
- 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.
Christmas 2022
You may have heard about the new rules which require directors of Australian companies to obtain a Director Identification Number (director ID). It is a unique 15-digit identifier that directors apply for once and keep forever. The following provides some useful further information. As a director of my SMSF’s corporate trustee do I need a director ID? The new requirement to obtain a director ID applies to all directors of corporate trustees of an SMSF. The only exclusion applies to a director who has resigned from all director roles during the period 04 April 2021 to 30 November 2022 and has no intention to ever be appointed as a director or alternate director of an Australian or foreign company. How long do I have before I need to get my director ID? Individuals that were a director of any company prior to 1 November 2021 have until 30 November 2022 to get a director ID. This transitional period also applies to newly appointed directors of corporate trustees of an SMSF, provided they were an existing director, of a company, before 1 November 2021. Otherwise, first time directors are now required to have a director ID before they are appointed as director of any company. What is the fastest way to apply for a director ID? With 30 November 2022 fast approaching, we strongly encourage all directors to apply for their director ID now. The fastest way to apply for your director ID is online at abrs.gov.au/directorID . To access the director ID application online, you will use your myGovID to log in to ABRS (Australian Business Registry Services) online. This director ID demonstration video will show you step by step, how to apply for your director ID online. What to do if you do not have a MyGovID already? A myGovID is different to your myGov account. Your myGov account allows you to link to and access online services provided by the ATO, Centrelink, Medicare and more, while myGovID is an app that enables you to prove who you are and to log in to a range of government online services, including myGov. If you do not already have a myGovID you will need to set this up before you can apply for your director ID online. Refer to mygovid.gov.au/setup for more information on setting up a myGovID. You will need to choose your identity strength, noting that ‘standard’ identity strength is the minimum strength required for a director ID. What if I can’t set up myGovID online? Where you are experiencing difficulties setting up your myGovID, the ATO encourages you to contact them on 13 62 50. To speed up the phone application, please have your TFN ready as well as the information listed below, required to verify your identity. If you cannot apply online or over the phone, the ATO will provide you with a paper form to complete. This is the least preferred option and will require you to provide certified copies of your documents to verify your identity. Can we help you get your director ID? You must apply for your director ID yourself, so that the ATO can verify your identity. To verify your identity against your ATO records, once you have logged into ABRS online using myGovID, you'll need your tax file number, your residential address held by the ATO, and information from two of the following documents: bank account details (where your tax refunds or payments are made and received) an ATO notice of assessment a dividend statement a Centrelink payment summary a PAYG payment summary (this is different to your income statement or your PAYG instalment activity statement). How can we help? If you have any questions or would like further information about director IDs, please feel free to give us a call on 1300 885 761, so we can discuss your requirements in more detail. Although we are unable to apply for a director ID on your behalf, we would be more than happy to guide you through the process and where possible, source documents to help you verify your identity with the ATO. For other information, resources, and timely updates relevant to your SMSF, please refer to the SMSF Association’s trustee education platform, SMSF Connect.
All employers are required to pay and report super guarantee payments electronically to ensure they meet SuperStream requirements. With the introduction of SuperStream it is now easier for the ATO to monitor your payments to ensure they have all been paid on time. Super guarantee payments must be made by employers to their employees' complying funds by quarterly due dates, which are 28 days after the end of each quarter. The due dates for each quarter are as follows: