It’s never “just business,” it’s always personal

Federal Budget

This week the long anticipated federal budget was handed down on my birthday (how is that for a birthday present for an accountant!)

Below is the summary of some of the changes that will affect individuals and small businesses;

 1. Individuals

Change in Personal Income Tax Rates

Proposed changes will be backdated to 1 July 2020 and include the following;

  • Increasing the 19% personal tax bracket from $37,000 to $45,000
  • Increasing the 32.5% personal tax bracket from $90,000 to $120,000

Rate

Current (2019 to 2022)

Proposed (2021 – 2024)

0%

0 – $18,200

0 – $18,200

19%

$18,201 – $37,000

$18,201 – $45,000

32.5%

$37,001 – $90,000

$45,001 – $120,000

37%

$90,001 – $180,000

$120,001 – $180,000

45%

$180,001+

$180,001+


Changes to the Low Income Tax Offset

From 1 July 2020 the low income tax offset will increase from $445 to $700 as well as the Low and Middle Income Tax Offset being extended until 30 June 2022.

 

Current LITO

 

(2021 to 2022)

 

Proposed LITO

 

(2021 to 2022)

  

$0 – $37,000

Up to $445

$0 – $37,500

Up to $700

  

 

$37,001 – $66,666

$445 – 1.5% of excess 
over $37,000

 

$37,501 – $45,000

$700 – 5% of excess over $37,500

  
 

 

$66,667 +

Nil

 

$45,001 to $66,666

$325 – 1.5% of excess over $45,000

  
 

 

 

$66,667 +

Nil

  

 

2. Small Business

Jobmaker Hiring Credit

This will be available to businesses who hire eligible employees from 7th October 2020 between 16 – 35 years old who were previously on jobseeker, youth allowance or a parenting payment. The credit will be available for up to 12 months and ranges from $100 - $200 per week per eligible employee. Employers who are claiming JobKeeper can not claim JobMaker as well.

The business must have an ABN, be registered for PAYGW, be reporting using STP and be up to date with lodgment obligations.

To discuss further eligibility please contact our office.

Uncapped immediate write off for depreciable assets

Businesses with turnover of less than $5billion will now be able to write off asset purchases in full for any asset purchased after 7.30pm on 6th October 2020 as long as it is ready and installed for use prior to 30 June 2022, bringing forward a tax benefit into a current year that would have otherwise been written off over the asset’s useful life.  This also applies to small business pool balances.

Temporary Loss Carry Back

If your business had losses in 2020 – 2022 and you paid tax previously, you will be able to access the tax paid previously as a tax refund in 2021 & 2022.

Fringe Benefits Tax Compliance easing

Reduction in record keeping required, in particular the annual declarations required to be signed by an employee.


If you have any questions or would like to discuss any of the above please don’t hesitate to contact us at the office on (02) 4044 1245. 

8 Oct 2020

David Woods

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