The Australian Federal Budget handed down by Josh Frydenberg on 6 October 2020 contains measures that impacts individual taxpayers, small business, superannuation, new apprentices and trainees.

With unemployment expected to peak in December 2020, the budget is all about jobs and is focused on growing the economy.

Here are the key measures that may impact you. These are proposed measures and are subject to the passage of legislation.

Accelerated Personal Tax Cuts

The “stage 2” personal tax cuts originally legislated to commence on 1 July 2022 will now apply from 1 July 2020. The main features are:

– Top threshold of the 19% bracket increases to $45,000 from $37,000.

– Top threshold of the 32.5% bracket will increase to $120,000 from $90,000.

– Low income tax offset (maximum of $700) has been brought forward.

– Low and middle income tax offset (maximum of $1,080) has been retained for 2020-21.

Extended Instant Asset Write Off

The $150,000 instant asset write off is being temporarily extended.

– From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover of up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed.

– The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.

Small Business Loss Carry Back

– Companies with turnover up to $5 billion can offset losses against previous profits on which tax has been paid to generate a refund.

– Eligible companies can carry back tax losses from the 2019/20, 2020/21 or 2021/22 income years to offset previously taxed profits in 2018/19 or later income years.

– Companies may elect to receive a tax refund when they lodge their 2020/21 and 2021/22 tax returns.

Fringe Benefits Tax (FBT)

– An FBT exemption will be provided for employers providing retraining and reskilling benefits to employees who are redundant or soon to be redundant where the benefit is not related to their current roles (certain criteria applies).

– Employers will be able to rely on existing corporate records (rather than employee declarations and other prescribed records) to finalise their FBT returns with the aim of reducing extra costs associated with the compliance burden of additional record keeping.

Insolvency Changes to Help Small Businesses

– Reforms will be implemented to support businesses affected by COVID-19 which will be designed to reduce regulatory burden for distressed businesses.

– Simplifying the liquidation process for eligible incorporated small businesses is a proposed measure included in the reforms.

Additional Research and Development (R&D) Incentives

– Additional enhancements to the proposed R&D incentives currently before the Senate have been announced.

– Small R&D entities (with a turnover of less than $20 million) will be able to access the refundable R&D tax offset at a premium 18.5 percentage points above their corporate tax rate.

– Incentives are also proposed for larger R&D entities.

– The start date of this measure has been deferred to income years starting on or after 1 July 2021 (original start date was from 1 July 2019).

Superannuation Reforms

– Employers will effectively stop offering the default fund option to new employees. The aim is to prevent unintended multiple super fund accounts being opened for employees when they change jobs (resulting in a super fund fees paid by members).

– Super funds will be required to meet an annual performance test under guidance from APRA.

– The Government will establish an interactive online super fund comparative tool for members called “Your Super”.

Jobmaker Hiring Credit

A Jobmaker hiring credit will be payable for up to 12 months to eligible employers.

– The Jobmaker hiring credit will be available from 7 October 2020 for eligible employees who work a minimum of 20 hours per week and are aged between 16 to 35 years.

– The hiring credit will be paid quarterly in arrears at a rate of $200 per week for employees aged between 16-29 years and $100 per week for employees aged between 30-35 years.

New Apprenticeships and Trainees

Businesses that take on a new apprentice or trainee will be eligible for a 50% wage subsidy:

– The program is proposed to commence from 5 October 2020 for the period until 30 September 2021.

– Employers could receive up to $7,000 per quarter and the subsidy is capped at 100,000 workers.

Please contact us to find out more about how the Federal Budget will impact you and your business. The team at EMspire Advisory are experienced accountants in Sydney and would like to help you create, grow and succeed in business.

Please note that this information is not specific and is general in nature and cannot be relied upon as advice. Please contact us for specific advice for you and your circumstances.