2020/21 Federal Budget: The most important parts
The 2020 Federal Budget night has once again come and gone, and what a night it was. Instead of a comprehensive look at all the changes that
were made, we’ve compiled some of the more important key points to come out of the 2020/21 Federal Budget.
Highlights
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Businesses (SMEs) will get a full tax deduction for the cost of any new asset they acquire from now through until
30 June 2022.
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Losses that are made in the current financial year can be carried back to apply against prior year profits in which tax has
been paid. Refunds can’t be obtained until the FY21 (or FY22) tax return has been lodged. Tax planning on
making variations to PAYG Instalments should be considered. In lieu of this, planning around the impact on franking account balances
and dividend payments will be important.
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JobMaker has been introduced to provide financial incentives for businesses to hire new employees aged between 16 and 35
who have previously been on JobSeeker or similar benefits.
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$1.3 Billion “modern manufacturing initiative” has been introduced to focus on fostering competitiveness, while also
aligning resources to build scale. Grants will open in the first quarter of next year to eligible businesses.
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In addition to manufacturing, more spending will also be completed in research, roads, infrastructure and residential construction.
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The Budget has been built on the assumption that a COVID-19 vaccine will be widely available by the end of 2021. Support measures will
become more targeted, and more limited. No changes have been made to JobKeeper from the budget.
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Personal income tax rate changes that were due to apply from 1 July 2022 have been brought forward to
apply from 1 July 2020. These changes involve:
- Increasing the upper threshold of the 19% bracket from $37,000 to $45,000.
- Increasing the upper threshold of the 32.5% bracket from $90,000 to $120,000.
Of course, there are many other items that came out of last night’s Federal Budget,
many of which will undergo further debate in the coming weeks. Hopefully, the Government addressed some of your concerns.
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