2020-21 Federal Budget
The Federal Budget was handed down on the 6th October 2020 with a view to cushion the impact of the Covid-19 pandemic and to kickstart an economic recovery.
The Government has provided $257 billion in support, with total debt peaking at $966 billion by 2024.
The Government forecasts a 3.75 percent contraction in the economy this calendar year, but a return to 4.25 per cent growth next calendar year, with unemployment to peak this year at 7.25 per cent.
Taxpayers
More than 11 million taxpayers will receive a tax cut back dated to July 1 this year. From 1 July 2024, 95 per cent of taxpayers will have a marginal tax rate of no more than 30 cents in the dollar.
Businesses – Plant & Equipment
Business with aggregated annual turnover of less than $5 billion will be able to deduct the full cost of eligible capital assets acquired from 7.30pm AEDT on 6 October 2020 (Budget night) and first used or installed by 30 June 2022.
Full expensing in the year of first use will apply to new depreciable assets and the cost of improvements to existing eligible assets.
Businesses with aggregated annual turnover of less than $50 million can also apply full expensing to second-hand assets.
Businesses with aggregated annual turnover of less than $10 million can deduct the balance of their simplified depreciation pool at the end of the income year while full expensing applies.
Businesses - Losses
There is also relief for businesses which have been “doing it tough” during the pandemic, with a measure which will enable them to use their losses earlier.
Losses incurred to June 2022 can be offset against prior profits made in or after the 2018/19 financial year, generating a refundable tax offset in the year in which the loss is made.
Businesses - Employing
To encourage businesses to hire younger Australians, the government has announced a new program called JobMaker, which will contribute $A200 per week, payable for one year, towards the hiring of people aged 16-35 who are currently on JobSeeker. The payment for those aged 30-35 is $A100 per week.
Infrastructure Projects
In keeping with its plan to boost jobs, the budget expands the Government’s 10-year infrastructure pipeline, bringing to $A14 billion the new and accelerated infrastructure projects which would support an estimated 40,000 new jobs.
The projects span the nation, and include major road upgrades in several states and rail projects in Victoria and Western Australia, and new bridges in Tasmania and the ACT.
An additional $A2 billion is also earmarked for road safety upgrades.
Apprentices
The budget commits an additional $A1.2 billion to create 100,000 new apprenticeships and traineeships, with a 50 per cent wage subsidy for businesses who employ them.
Eligible Social Security Recipients
Two separate $250 payments will be made to recipients of certain income support payments including the age pension, carer payment and family tax benefits, and also health care card holders.
First Home Buyers
The Government announced an additional 10,000 places for first home buyers of new homes under the First Home Loan Deposit Scheme.
The budget also includes an additional $A1 billion in low cost finance for the construction of affordable housing, and $A150 million in the Indigenous Home Ownership Program for new homes in regional areas.
Superannuation
From 1 July 2021, you will keep your super fund when you change jobs, stopping the creation of unintended multiple super accounts and the erosion of your super balance.
A superannuation comparison tool will be created to help you decide which super product best meets your needs.
By 1 July 2021, MySuper products will be subject to an annual performance test. If a fund is deemed to be underperforming, it will need to inform its members of its underperformance by 1 October 2021.
Older Australians
The Government will provide a targeted capital gains tax (CGT) exemption for granny flat arrangements where there is a formal written agreement. The exemption will apply to arrangements with older Australians or those with a disability. The measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.
Article posted Thursday 8th October, 2020