FEDERAL BUDGET 2020 - an overview
This Federal budget may be the most important one in over a decade, so what is in it for you? Below we have summarised the key points for our clients:
A huge number of Australians will immediately begin paying less income tax - and they’ll reap the benefit very soon, and in an unprecedented move, they’ll be backdated to July 1 this year. That means workers don’t have to wait until they do their next tax return to start paying less. But the mechanism for fast-tracking the hip pocket relief is complicated and the timing is a little uncertain. Mr Frydenberg wants that extra money to be in your pocket as soon as possible and a bunch of number-crunching boffins in Canberra will soon be hard at work.
In a nut shell, once the Australian Taxation Office is confident that the Budget will be passed by Parliament, it’ll begin the process of enacting the change.
This will happen either when the legislation passes, or if the Opposition pledges to support the tax cut measures.
Given that, the government can’t put a firm date on it, but it’s expected to happen by the end of the year - just in time for the crucial Christmas retail period
More info on these cuts and estimated amounts here -
Eligible employers will have access to a JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for which they hire an eligible employee, for a maximum claim period of 12 months from their employment start date.
Employers will register with the ATO and make claims quarterly, with claims commencing in February 2021.
This measure is subject to the passage of legislation.
The JobMaker Hiring Credit will be:
$200 per week for each eligible employee aged 16 to 29
$100 per week for each eligible employee aged 30 to 35.
An employer cannot claim JobKeeper and JobMaker Hiring Credit at the same time.
IMMEDIATE WRITE OFF INCREASED FROM $150K to UNLIMITED
Businesses with an aggregated annual turnover of less than $5 billion will be able to claim an immediate deduction for the full (uncapped) cost of an eligible depreciable asset, in the year the asset is first used or is installed ready for use, where the following requirements are satisfied:
• The asset was acquired from 7:30pm AEDT on 6 October 2020 (i.e., Budget night).
• The asset was first used or installed ready for use by 30 June 2022.
• The asset is a new depreciable asset or is the cost of an improvement to an existing
eligible asset, unless the taxpayer qualifies as a small or medium sized business (i.e., for
these purposes, a business with an aggregated annual turnover of less than $50 million),
in which case the asset can be second-hand.
Before you go out and buy a Ferrari - this excludes motor vehicles that are still limited to the depreciable car limit of $57,581.
FIRST HOME BUYERS
Those open to buying a brand-new home will benefit from the expansion of the government’s First Home Loan Deposit Scheme. The scheme will be extended to help an extra 10,000 people and the value of the properties eligible will also be increased.
Previously properties worth up to $700,000 in Sydney were covered under the scheme, but this will be increased to $950,000. Melbourne’s cap will be increased to $850,000 and Brisbane to $650,0000. It means that first home buyers with a 5 per cent deposit won’t have to pay lenders mortgage insurance.
LOSS CARRY BACK
Measures to allow companies with a turnover of less than $5 billion to carry back losses from the 2020, 2021 or 2022 income years to offset previously taxed profits made in or after the 2019 income year will be introduced.
This will allow such companies to generate a refundable tax offset in the year in which the loss is made. The tax refund is limited by requiring that the amount carried back is not more than the earlier taxed profits and that the carry back does not generate a franking account deficit.
The tax refund will be available on election by eligible companies when they lodge their tax returns for the 2021 and 2022 income years. Note that, companies that do not elect to carry back losses under this measure can still carry losses forward as normal.
If you have any questions please call us on 02 9030 0269.
Founder & Director
Two Sides Accounting
02 9030 0269