I believe the biggest two things to come out of the Budget are:
1. Personal Tax Cuts; and
2. Unlimited asset write off (fully expensing asset purchases) until June 2022
Personal tax cuts – these changes have already passed parliament. The 19% bracket which used to cut-out at $37,000 now cuts out at $45,000. The 32.5% bracket which used to cut-out at $90,000 now cuts out at $120,000. There are also some slight changes/increases to tax offsets. The ATO will be finalising the PAYG withholding tax tables this week and then the software companies should push out updated tax tables within a few weeks. The ATO has confirmed there is no need to back date any payroll adjustments. Since the tax cuts have been back dated until 1/7/20 but employees will not see the changes until a few weeks’ time, this means employees will receive slightly higher refunds when doing 2021 individual tax returns. 3D Accounting are looking forward to utilising these changes when we implement strategies at tax planning time next April-June.
Asset write off – for businesses under 5 billion turnover (yes 5 billion!), any assets purchased of any amount can be fully expensed immediately. Existing small business asset pools can also be fully written off. This applies until June 2022. Can I advise a level of caution here – only buy assets you need. This is a great measure, but it is not really an additional tax break it is only bringing forward the tax deduction you would have otherwise received over say a five year period via depreciation. Also keep in mind that because the asset has been fully expensed, when you go to sell it, all of the proceeds will be classed as profit on sale of that asset which will be included in the taxable income of your business for that year.
Some other measure which might affect some of you are:
· Jobmaker hiring credit of $100 – $200 for each new job created until Oct 2021 (for under 35 years old’s)
· 50% apprenticeship /trainee subsidy until Sep 2021
· Loss carry-back for companies – allows companies with a loss in the current year to claim a refund back against tax paid on profits in the prior year
Further details on these and other measures can be found at the following link to CPA Australia’s Budget Overview:
If you have any specific queries please don’t hesitate to contact us. All the best.
Jacob & Team