With all of the unpredictability that is 2020, the Federal Government has followed suit by delivering a Budget in October rather than the usual May timeframe. As expected, the overshadowing theme of this year’s Budget is COVID-19 relief and an economic recovery plan that provides incentives for both individuals and businesses.
In this newsletter, we cover off on a few of the major incentives announced that may interest you.
INDIVIDUAL TAX CUTS
For individuals, the Government has brought forward future tax cuts with an effective date of 1 July 2020. By adjusting the individual tax thresholds, this will reduce taxes for all taxpayers immediately and see taxpayers receiving more in their take home pay each pay cycle. Taxpayers could potentially receive a reduction in taxes of up to approximately $2,745 over the year. This benefit has also been achieved by the Government making the decision to continue access to the Low & Medium Income Tax Offset for an additional year.
The below diagram from the Budget Papers shows the changes to the tax thresholds.
JOBMAKER HIRING CREDIT
The JobMaker Hiring Credit was announced for businesses to incentivise employment of young job seekers. This program is expected to run for 12 months from 7 October 2020.
The amount of the payment is as follows:
• $200 per week for each eligible employee aged 16 to 29
• $100 per week for each eligible employee aged 30 to 35
For an employee to be eligible for the payment, they must have been in receipt of one of the following payments for at least one of the previous three months at the time of employment:
• JobSeeker Payment
• Youth Allowance (Other); or
• Parenting Payment
Employers will also need to meet particular eligibility criteria for entry to the program. As the name describes, this payment is all about ‘making’ new jobs. The employer needs to demonstrate that there has been in increase in the number of employees from the reference date of 30 September 2020 and also an increase in the payroll of the business in comparison to the September 2020 quarter.
BOOSTING APPRENTICESHIP COMMENCEMENTS
Under this announcement, any businesses or Group Training Organisations that engage an Australian Apprentice, could be eligible for a 50% subsidy of the wages paid to that apprentice from 5 October 2020 up until 30 September 2021. There is cap of $7,000 per quarter that can be claimed.
INSTANT ASSET-WRITE OFF
Businesses with a turnover of up to $5 billion, are now able to immediately expense any eligible assets acquired after 7.30pm on 6 October 2020 and first used or installed prior to 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. For small and medium sized businesses (with aggregated annual turnover of less than $50 million), full expensing also applies to second-hand assets.
LOSS CARRY BACK
Eligible corporate entities with less than $5 billion in turnover can carry back losses made in the 2020, 2021 and 2022 financial years and apply against income tax liabilities incurred in either the 2019, 2020 or 2021 financial years. The amount of the refund is limited by the corporate entity’s income tax liabilities in the relevant gain years and its franking account balance at the end of the year in which the entity lodges its tax return claiming the loss carry back tax offset (the 2020–21 or 2021–22 financial year).
If you would like to discuss any of the measures announced in the Federal Budget and how you or your business can reap the benefits, please contact the Halpin Partners team on (07) 4052 0800.