2021 – 2022 Federal Budget

Welcome to Advivo’s summary of what we believe are the most relevant points for businesses from the 2021 – 2022 Federal Budget announced last night. Josh Frydenburg has delivered a ‘Pandemic’ Budget focused on job creation, infrastructure, women’s rights and protection & equality and health issues including aged care, NDIS, mental health and childcare, housing affordability and economic recovery.

The Budget has not introduced any major changes to the tax system or significant changes for business.  Australia is now expected to be in a deficit of $161b in 2020-21 compared with a budgeted $213.7b as forecasted last October. In general, our economy is faring better than most advanced economies with the unemployment rate expected to fall below 5% by late 2022, reaching 4.75% by 2023.

Below are Advivo’s highlights of the Budget as we believe are most relevant for our clients:

Companies and Business

Good

  • Instant Asset Write Off – Temporary full expensing of eligible assets will be extended by 12 months to 30 June 2023.
    This is bringing forward the tax deduction which can have the adverse effect of a larger tax bill if the asset is subsequently sold.
  • Loss Carry Back Offset will be extended by one year to apply for 2022–23 income year losses.
    This will be useful particularly for businesses suffering from a COVID lag or delayed decline in turnover.
  • The Boosting Apprenticeship Commencements wage subsidy will be expanded to increase the number of places providing businesses with up to a 50% reimbursement of an apprentice or trainee’s wages for 12 months.

Bad

  • Superannuation guarantee increase from 9.5% to 10% still set to go ahead from 1 July 2021.
  • Superannuation guarantee exemption for employees earning less than $450 in a month will be removed from 1 July 2022.
    Both of the above are good for individuals but will have a cash flow impost for business.
  • The heavy vehicle road user charge will be increased from 25.8 cents per litre to 26.4 cents per litre from 1 July 2021.
    This will reduce the fuel tax credits available for heavy vehicles with GVM > 4.5t.

Superannuation

  • From 1 July 2022, individuals aged 67 to 74 will no longer be required to meet the work test when making or receiving non-concessional superannuation contributions or salary sacrificed contributions.
  • From 1 July 2022, the eligibility age to make downsizer contributions into superannuation will be reduced from 65 to 60 years of age allowing up to $300,000 to be contributed into superannuation per person.
  • The maximum amount of contributions that can be released from superannuation under the first home super saver scheme (FHSSS) will be increased from $30,000 to $50,000 from 1 July 2022.

Individuals

  • The low and middle-income tax offset, available to taxpayers earning less than $126,000 per year, will remain for the 2021–22 income year.
  • Individual tax residency rules to be simplified to make 183 days physically present in Australia sufficient to be an Australian tax resident.
  • The current limitation for claiming a self-education expense, where the first $250 of the allowable deduction is denied, will be removed.

For the full reports supplied by Wolters Kluwer please follow these links:

2021-22 Parliament Budget Report | Wolters Kluwer

2021-22 Tax and Accounting Budget Report | Wolters Kluwer

Is your business ready to maximise deductions for the financial year? Join us for our Lunch & Learn online event where we will be discussing the essential things you need to be across both pre and post 30 June to maximise your business and personal situation.

If you have any questions or concerns feel free to contact us.

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