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2021/22 Federal Budget Highlights

Dawson & Partners • May 31, 2021

On 11 May 2021 the Budget for 2021–22 was released. The measures announced as part of the 2021–22 Budget are subject to receiving royal assent and are not yet law.

There are a number of changes that may have an impact on your business, personal or superannuation situation. The key points are:

Personal income tax

strong> 1.  Retaining the Low and Middle Income Tax Offset ('LMITO')

The Government has announced that it will retain the LMITO for one more income year, so that it will still be available for the 2022 income year. Under current legislation, the LMITO was due to be removed from 1 July 2021.

The maximum offset proposed for the 2022 income year is $1,080 per annum. However, the amount you receive depends on your income and how much tax you've paid throughout the year. It doesn't mean that you will automatically get an extra $1,080 in your tax return.

strong> 2.  Increasing the Medicare levy low-income thresholds

The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year, as follows:

  • The threshold for singles will be increased from $22,801 to $23,226.
  • The family threshold will be increased from $38,474 to $39,167.
  • The threshold for single seniors and pensioners will be increased from $36,056 to $36,705.
  • The family threshold for seniors and pensioners will be increased from $50,191 to $51,094.

For each dependent child or student, the family income thresholds increase by a further $3,597, up from the previous amount of $3,533.

Business income tax

strong> 1.  Temporary full expensing extension

In the 2021/22 Federal Budget, the Government has announced that temporary full expensing will be extended by 12 months until 30 June 2023 to allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023. All other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses.

strong> 2.  Temporary loss carry-back extension

In the prior year (2020/21) Federal Budget, the Government announced amendments to introduce a temporary loss carry-back measure. Broadly, this initial measure allowed 'corporate tax entities' with an aggregated turnover of less than $5 billion to carry back tax losses made in the 2020, 2021 and/or 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and/or 2021 income years.

In the 2021/22 Federal Budget, the Government has announced that the loss carry-back measure will be extended to allow eligible companies (i.e., with aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.

Eligible entities get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it was able to deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt owing to the ATO.

The eligible entity does not need to amend the earlier income years to claim the offset.

Consistent with the current law, the tax refund available under this measure is limited by requiring that the amount carried back is not more than the earlier taxed profits and does not generate a franking account deficit. Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.

Superannuation

Please refer to our article '2021-22 Federal Budget Update – A strong Budget for SMSFs' for the detail regarding superannuation changes.

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

07 Dec, 2022
Christmas 2022

Time is running out to apply for a Director Identification Number (director ID)

22 Nov, 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.

Superannuation Guarantee due date for payment – 28 October 2022

By Dawson & Partners • 23 Oct, 2022
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: 
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