Federal Budget 2021: Here’s the highlights.

Highview Partner & CPA, Simon Byers, has reviewed the Federal Budget 2021 in detail & provided us with some much needed taxpayer summary highlights – thank you Simon!

The Treasurer and his band of merry men and women have reached deep into the money bag and delivered a generous budget in many areas that aims to turbo charge the economic recovery following last year’s pandemic. We won’t talk about the size of the debt or how we are going to pay it back… for now let’s just make the most of what has been put forward for taxpayers. 

Here are a few of the taxpayer highlights… 

$1,080 LMITO Offset Extended 

Treasurer Josh Frydenberg on Tuesday announced that the low and middle income tax offset (LMITO) would be extended for a further year at a cost of $7.8 billion. The government, however, will not seek to bring forward its legislated stage 3 tax cuts, which are meant to kick in from 1 July 2024, with 95 per cent of taxpayers to face a marginal tax rate of 30 per cent or less. 

The LMITO provides individuals with taxable incomes between $48,000 and $90,000 with a maximum offset of $1,080. Taxpayers earning less than $37,000 will see a benefit of up to $255. 

“This is more money to spend in local businesses, giving them the confidence to take on an extra worker, offer an extra shift or buy a new piece of equipment,” said Mr Frydenberg.

Full Expensing of New Equipment + Full Expensing and Loss Carry Back Extended to 2023 

Eligibility for the temporary full expensing measure will remain unchanged meaning businesses with a turnover of less than $5 billion will be able to deduct the full cost of eligible depreciable assets of any value as long as it is acquired after 7:30pm on 6 October 2020 and first used or installed by 30 June 2023. 

Loss Carry Back 

The extension to the temporary loss carry-back will also allow companies with a turnover of less than $5 billion to carry back a tax loss from 2022-23 income year and apply it against tax paid in a previous income year, as far back as the 2018-19 income year.

Scrapping the $450 Minimum SG Threshold 

Under the current rules, employees earning less than $450 a month are not required to be paid the Superannuation Guarantee (SG) by their employer. 

However, the government has revealed in its federal budget a plan to scrap the $450 minimum threshold, in a move that will see 300,000 workers set to receive additional SG payments each month. Of the 300,000 workers, 63 per cent are estimated to be women. 

The government expects the measure to kick in from 1 July 2022 and is estimated to decrease the underlying cash balance by $31.5 million over the forward estimated period. 

Apprenticeship Subsidy Extended 

The government has announced that it will provide an additional $2.7 billion over four years from 2020-21 to expand wage subsidies for qualifying apprenticeships. The measures will uncap the number of eligible places and increase the duration of the subsidy to 50% of wages paid to apprentices or trainees for 12 months from the date they commence employment, up to a maximum of $7,000 per quarter. 

The subsidy originally applied to apprentices employed between 5 October 2020 and 30 September 2021. The end date has now been extended to 31 March 2022. 

If you’ve got further queries on how these changes affect you, please chat with your Highview accountant this tax time. Our team will ensure you get all that you’re entitled to.