Budget Summary of the 2020-21 Budget

With the federal budget now released, we take a look at the key elements and break them down into an easy to digest summary. We will take a look at :

Tax Advantages

Economic Outlook

Industry Targeted Funding

Let’s begin with the tax advantages.

Tax Advantages

Personal Income Tax Cuts:

• Brought forward effective from 1^st July 2020
• Low Middle Income Tax Offset (LMITO) extended for the 2021 Financial Year
• Low Income Tax Offset (LITO) increased from $445.00 to $700.00

Loss Carry-Back for Companies:

• 2020 – 2022 Financial Years, tax losses are able to be used to offset earlier taxable profits
• Limitation to the amount that can be refunded, applicable only to the amount of taxed profits

Note :

Eligible Companies – aggregated turnover of less than $5 billion

Consideration due to the large losses, caused by the application of the instant asset write off

Extension of Apprenticeship Wage Subsidy:

• New Australian Apprentices from 5^th October 2020 – 30^th September 2021
• Limitation 50% subsidy limited to $7,000 per quarter
• Claims to start from the 1^st January 2021

Instant Asset Write Off:

• Complete deduction of newly acquired assets from 6^th October 2020 – 30^th June 2022
• Extended to businesses with an aggregated annual turnover of less than $5 billion

JobMaker Hiring Credit:

• Introduced from the 7^th October 2020 over the next 12 months
• Program to make claims to begin from the 1^st February 2021

Eligible Employees	Amount Receivable
Aged 16 to 29	$200 per week
Aged 30 to 35	$100 per week

Employee Eligibility :

• Work at least 20 Hours per week
• Employment commenced between 7^th October 2020 – 6^th October 2021
• Employee received a Centrelink payment for at least one month within the past three months before employment
• Must not also be under the ‘Apprentice Wage Subsidy’

Employer Eligibility :

• ABN
• Up to date tax obligations
• Registered for PAYG Withholding
• Using Single Touch Payroll
• Reference to increase in headcount, based on September 2020 Quarter
• Eligible Employee
• Records of eligible employee employment kept

Ineligible Employer :

• Commonwealth, state and local government operated entities
• Entities in liquidation or bankruptcy
• Employers claiming JobKeeper Payment
• Employers subject to the major bank levy

Research & Development Tax Incentive:

• Introduction in the 2022 Financial Year

Granny Flat CGT Exemption:

• Introduction in the 2022 Financial Year
• Limitation – Condition of application, must be applied to familial ties (Not Commercial)

Extension of Small Business Tax Concessions:

• Aggregated turnover requirement changed from less than $10 million to less than $50 million
• Gradual implementation until the 2022 Financial Year

Economic Outlook

Situational Scenarios :

• Positive – COVID-19 Vaccine
• Negative – COVID-19 Outbreaks

Households :

• Fell by 12.1% in the June 2020 Quarter
• Expected to recover, however to remain slightly lower than pre-COVID-19 levels

Business Investment :

• Fall by 9.5% in the 2021 Financial Year
• Deterioration in non-mining investment – driven by decline in machinery and equipment investment

Public Final Demand :

• Forecast to grow by 5.75% in the 2021 Financial Year

Industry Targeted Funding

Modern Manufacturing Strategy ($1.3 billion):

National Manufacturing Priorities

• Resources Technology & Critical Minerals Processing
• Food & Beverage
• Medical Products
• Recycling & Clean Energy
• Defence
• Space

Modern Manufacturing Initiative

• Manufacturing Collaboration Stream – support business to business and business to research collaboration
• Manufacturing Translation Stream – support manufacturers in translating ideas into commercial products
• Manufacturing Integration Stream – assist with accessing the local and international markets

Infrastructure Investment:

Targets the construction of roads and rail projects

$12.5 billion investment into infrastructure :

• Queensland – $1.3 billion
• New South Wales – $2.7 billion
• Australian Capital Territory – $155.3 million
• Northern Territory – $189.5 million
• South Australia – $625.2 million
• Western Australia – $1.1 billion
• Victoria – $1.1 billion
• Tasmania – $359.6 million

National Programs :

• National Water Grid – $2 billion
• Local Roads & Community Infrastructure – $1 bilion
• Road Safety & Upgrades – $2 billion

Agriculture:

• Agriculture Workforce
• Push to encourage school leavers to undertake agricultural work
• Provide benefits to attract both domestic and foreign workers (Working Holiday Makers)
• Drought
• Infrastructure
• Competition

Housing:

• Aimed to assist first home buyers

Other Targeted Funding:

• Investment in new energy (low emission) technology
• Australian waste management (Recycling)
• Support for regional Australia
• Commonwealth Scientific and Industrial Research Organisation (CSIRO) – supporting scientific research to be applied into commercial activities