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 1st 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

income tax bracket schedule updated for 2020 budget

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

Instant Asset Write Off:

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

instant asset writeoff guide

JobMaker Hiring Credit:

  • Introduced from the 7th October 2020 over the next 12 months
  • Program to make claims to begin from the 1st 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 7th October 2020 – 6th 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

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