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Updates & Articles For your Business

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Australian Tax Budghet 2021

Federal Tax Budget benefits for Small to Medium Businesses

Forget the rhetoric about the Federal Tax Budget being an election budget, let’s talk about what is in it for your business and family.

THE ECONOMY.

The landscape for your business should be positive.

  • The economy is expanding with forecasted growth. 4.25% is much higher than normal
  • Unemployment is predicted to fall to very low levels.

We already know that in Western Australia it is hard to get staff in certain industries (Construction & Hospitality) and these tax announcements indicate the drivers of the extra demand for labour have been extended.

SPECIFIC INDUSTRIES BENEFITTED

The federal tax budget announced specific spending budgets in areas listed below but NOTE the $’s are over extended time frames and will take some lead time to determine where the spending will be applied.

  • AGED CARE (17.7 Billion over 5 years = $3.5 billion per annum.)
  • 80,000 home care packages. This is support to allow older Aussies to stay at home rather than commit to an aged care facility.

This opens up all sorts of opportunities to Home Maintenance businesses.

INFRASTRUCTURE SPENDING

Following last year’s large commitment, this federal tax budget contains more spending on specific infrastructure projects in each state. The impact will be profound and so you need to analyse where the government expenditure has been (and will continue to be) and what businesses will benefit. They will mainly be in the public arena and LARGE, – thus presenting investment opportunities.

MEDICAL INNOVATION – Patent Box

Income from Medical and Biotech work conducted on R&D after the registration of a patent will be taxed at 17%.

TAXATION CONCESSIONS

1. Personal tax cuts, 10 million low-income earners will receive a tax offset of which is worth up to $1,080 for individuals or doubling this to $2,160 for dual-income couples.

2. 100% write-off of capital expenditure will be extended to June 2023.

3. Companies who have made losses this year will be able to offset these losses against the prior year’s profits and obtain a refund of tax previously paid. This opportunity has been extended to June 2023.

4. Employee Share schemes have lost favour recently due to the taxing point being brought forward of the actual realisation date. The rules will be relaxed to motivate employers to enter share schemes and in so doing attract highly skilled team members.

5. The ATO‘s powers to litigate for collection of unpaid taxes is now subject to a higher authority to which an aggrieved taxpayer can appeal if he feels the ATO is acting unreasonably.

6. Digital Games Offset, This is an interesting development where a 30% tax offset is available for businesses developing Digital Games. The only problem being you must spend more than $500K on such expenditure. Does the Treasurer’s son run a digital game business?

SUPERANNUATION

  1. The movement to 10% SGC from July 1st 2021 remains unchanged.
  2. The SGC exemption from wages less than $450 per month has been removed and so all wages will be subject to SGC.
  3. Contributions to Superannuation Funds for Aussies aged 67 to 74 will be made easier with the abolition of the work test.
  4. Contributions to Super from downsizing your home have been broadened by easing qualification rules from the previously required age of 65 is reduced to 60.

HIGHER EDUCATION COURSES

The cost of undertaking higher self-education courses will be deductible up to $5,000 per person.
This will be extremely helpful for part-time workers undertaking higher education.

CHILDCARE

From July 2022, families will receive more support from the Australian Government with the Child Care Subsidy to be increased for families with multiple children under the age of 6.

Including,

  • increasing CCS for families with more than one child in care under the age of 6, and
  • removing the annual cap

Read more here – Tax Incentives to Support the Recovery

PLEASE NOTE

The start dates on many of the initiatives depend upon when it’s legislated, so it’s not as straightforward as it sounds.  Book an appointment with our accounting team to discuss how the Federal Tax Budget applies to you and other tax planning opportunities.

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