The Federal Budget handed down by Josh Frydenberg on 11 May 2021 contained various measures impacting individual taxpayers, small businesses, superannuation, and corporations.

The key focus of this year’s budget was to stimulate the long-term economy with the hope to pay down debt that has been accumulated in the Government’s response to COVID-19.

Here are the key measures that may impact you. These are proposed measures and will be subject to receiving Royal Assent.

Personal Tax

• The low and middle-income tax offset (LMITO) has been extended for the 2021-22 income year and will deliver tax cuts for low and middle-income earners of up to $1,080 (this will be received upon lodgement of 2021-22 income tax return).

• No further changes will be made to personal income tax rates for the 2021-22 income year.

• The exclusion of the first $250 of deductions for prescribed courses of education has been removed (proposed to start in the financial year commencing after Royal Assent).

• The individual residency test has been reformed and the Government will replace the existing tests for tax residency of individuals with a primary 183-day test. A person who is physically in Australia for 183 days or more in any income tax year will be an Australian tax resident (proposed start date is 1 July following Royal Assent).

• Medicare Levy low-income thresholds for singles, families, seniors, and pensioners will increase starting from 1 July 2020 to take account of recent CPI movements.

• Childcare reform in increased subsidies from 1 July 2022.

Small Business Concessions

• The temporary full expensing of fixed assets will be extended for 12 months until 30 June 2023 (applies to businesses with an aggregated turnover of greater than $5 billion)

• Loss carryback provisions for eligible companies (aggregate annual turnover of up to $5 billion) will be extended to allow losses incurred during the 2020 to 2023 years to be carried back to offset profits as far back as the 2019 year.

• The Government will make changes to the taxing point for employee share schemes (proposed start date is 1 July following Royal Assent).


• The superannuation contributions work test will be repealed from 1 July 2022 for voluntary non-concessional and salary sacrificed contributions for those under the age of 75.

• The work test will still apply for personal deductible contributions by those aged 67-74.

• Changes to the SMSF residency rules will see the central management and control test safe harbour extend from 2 to 5 years and the active member test for both SMSF’s and APRA funds will be removed.

• The $450 per month super guarantee threshold will be removed from 1 July 2022.

• There is no change to the already legislated increase in super guarantee contributions from 9.5% to 10% commencing on 1 July 2021.

• The eligibility age for downsizer contributions will be reduced from 65 to 60 years of age.

• The First Home Super Scheme is to be extended for withdrawals up to $50,000

• The Pension loans scheme will be extended to allow access of up to 2 lump sums in any 12-month period (up to a total of 50% of the maximum annual Age Pension) along with a Government guarantee that “No negative equity” will apply.

Corporate Tax

• From 1 July 2022, the Government confirmed a 30% Digital Games Tax Offset for eligible businesses that spend a minimum of $500,000 on qualifying games expenditure (excludes gambling).

• An option will be available from 1 July 2023 to self-assess the effective life for certain intangible assets (eg. Intellectual property and in-house software).

• The excise refund cap for small brewers and distillers will increase from $350,000 on 1 July 2021.

• A review of the venture capital tax concessions will be undertaken in 2021.

Tax Compliance and Integrity

• The Government will introduce legislation to allow small businesses to pause or modify ATO debt recovery action where debt is being disputed in the AAT until the underlying dispute is resolved by the AAT.

• The changes will take effect from the date of Royal Assent of the amending legislation.


Please contact us to find out more about how the Federal Budget will impact you and your business.

The team at EMspire Advisory are trusted, qualified chartered accountants and work closely with our clients to achieve the best possible outcomes. So to find out more and if you can benefit from these tax measures, please contact us!

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