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
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
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