“Australia’s economic response to the COVID-19 pandemic in the form of the original and extended JobKeeper scheme, the cashflow boosts and the enhanced JobSeeker payment has come at a significant cost”, Mr Frydenberg said, resulting in a budget deficit of $213.7b, falling to $66.9b by 2023-24.

The government has proposed to bring forward, by two years, individual tax cuts legislated to start in 2022-23, meaning as of the 2020-21 income year the 19% threshold will be lifted from $37,000 to $45,000 and the 32.5% threshold lifted from $90,000 to $120,000. The low and middle-income tax offset will also be retained for an additional year.

In a major boost to business investment, immediate deductions for asset purchases of any value will be available to businesses with a turnover of up to $5 billion, until June 2022. Other measures include further refinement of proposed changes to the Research & Development incentive, Fringe Benefits Tax and Capital Gains Tax exemptions.

Individuals:

  • Individual income tax cuts for the 19% and 32.5% tax brackets will be brought forward two years to 1 July 2020, as will an increase to the low- income tax offset. Planned removal of the low and middle-income tax offset has been scrapped for one year.
  • Income tax exemptions for individuals working for the International Monetary Fund and the World Bank Group to be clarified.

Business incentives and companies:

  • Business with aggregated annual turnover of up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The full expensing period is available from 7:30pm AEDT on 6 October 2020 to 30 June 2022.
  • Small business depreciation pools may have up to 30 June 2022 to write-off their entire balances.
  • Companies with turnover between $50 million and $500 million given additional six months to comply with instant asset write-off provisions.
  • Businesses with turnover between $10 million and $50 million will have access to some existing small business tax concessions.
  • The research and development (R&D) tax incentive is proposed to change from 1 July 2021. Small R&D entities to be entitled to an offset of 18.5 percentage points above their tax rate with no refundable limit. Large R&D entities will have intensity tiers reduced from three to two, with offsets of 8.5 and 16.5 percentage points above their tax rate.
  • Eligible employers can claim a JobMaker Hiring Credit of up to $200 per week for each additional new job they create for an eligible employee from 7 October 2020 to 6 October 2021.
  • The apprenticeship wage subsidy will be further expanded by JobMaker.
  • Eligible companies with turnover up to $5 billion will be able to offset tax losses against prior year taxed profits to generate a refund.
  • Companies that are incorporated offshore will be treated as Australian tax residents where there is a significant economic connection to Australia.
  • Victorian business support grants will be made non-assessable, non-exempt income for tax purposes.
  • Australia will increase funding to strengthen its foreign investment framework.

Other tax measures:

  • Employer-provided re-training and re-skilling for redundant, or soon to be redundant, employees will be exempt from fringe benefits tax.
  • Employers will be allowed to use existing corporate records, rather than prescribed records, to comply with their fringe benefits tax obligations.
  • Seven more organisations have been approved as specifically listed deductible gift recipients.
  • The list of jurisdictions that have an information sharing agreement with Australia will be updated.
  • The import duty waiver for certain medical and hygiene products used against COVID-19 will be extended.

For more information please contact Paris Barns.

About Allan Hall Business Advisors:

Allan Hall Business Advisors is a firm of Chartered Accountants and specialist business advisors established on Sydney’s Northern Beaches in 1957 and are currently ranked 42nd in Australia in the highly regarded Australian Financial Review Top 100 Accounting firms.

With eight partners and 90 staff, and recently opened satellite offices in Brisbane and Adelaide, the firm has grown to become one of the largest, non-CBD, integrated chartered accounting and business advisory firms in Australia.