2020/21 Federal Budget Highlights
Australia's economic response to the COVID-19 pandemic in the form of the original and extended JobKeeper scheme, the cashflow boosts and the enhanced JobSeeker payment has come at a significant cost, Mr Frydenberg said, resulting in a budget deficit of $213.7b, falling to $66.9b by 2023/24.
The government has proposed to bring forward by two years individual tax cuts legislated to start in 2022/23, meaning as of the 2020/21 income year the 19% threshold will be lifted from $37,000 to $45,000 and the 32.5% threshold lifted from $90,000 to $120,000. The low and middle income tax offset will also be retained for an additional year.
Individuals
• A targeted capital gains tax exemption will apply for granny flat arrangements where there is a formal written agreement in place.
• Income tax exemptions for individuals working for the International Monetary Fund and the World Bank Group to be clarified.
Business incentives and companies
• Small business depreciation pools may have up to 30 June 2022 to write-off their entire balances.
• Companies with turnover between $50m and $500m given additional six months to comply with instant asset write-off provisions.
• Businesses with turnover between $10m and $50m will have access to some existing small business tax concessions.
• The research and development (R&D) tax incentive is proposed to change from 1 July 2021. Small R&D entities to be entitled to an offset of 18.5 percentage points above their tax rate with no refundable limit. Large R&D entities will have intensity tiers reduced from three to two, with offsets of 8.5 and 16.5 percentage points above their tax rate.
• Eligible employers can claim a JobMaker Hiring Credit of up to $200 per week for each additional new job they create for an eligible employee from 7 October 2020 to 6 October 2021.
• The apprenticeship wage subsidy will be further expanded by JobMaker.
• Eligible companies with turnover up to $5b will be able to offset tax losses against prior year taxed profits to generate a refund.
• Companies that are incorporated offshore will be treated as Australian tax residents where there is a significant economic connection to Australia.
• Victorian business support grants will be made non-assessable, non-exempt income for tax purposes.
• Australia will increase funding to strengthen its foreign investment framework.
Other tax measures
• Employer-provided retraining and reskilling for redundant, or soon to be redundant, employees will be exempt from fringe benefits tax.
• Employers will be allowed to use existing corporate records, rather than prescribed records, to comply with their fringe benefits tax obligations.
• Seven more organisations have been approved as specifically listed deductible gift recipients.
• The list of jurisdictions that have an information sharing agreement with Australia will be updated.
• The import duty waiver for certain medical and hygiene products used against COVID-19 will be extended.
Superannuation
• Individuals will keep their existing superannuation fund when they change jobs. Employers will pay super to a new employee's existing fund rather than creating a new account.
• An interactive online comparison tool will help individuals decide on the best superannuation product to meet their needs.
• From July 2021, APRA will conduct benchmarking tests on the net investment performance of MySuper products and prohibit underperforming products from receiving new members.
• Superannuation trustees will be required to comply with a new duty to act in the best financial interests of members.
Social security
• Two separate $250 economic support payments will be provided to eligible recipients. The first payment will be made from November 2020 and the second from early 2021. A one-off $1,500 pandemic leave payment will be made to eligible individuals who are unable to work and earn income while under a direction to self-isolate, quarantine or who are caring for someone who has tested positive to COVID-19.