Whilst Government debt will increase to unprecedented levels the Federal Government has introduced measures to increase business confidence and provide tax relief to kick start the economy. Detailed below is a summary of the key business and tax measures from the budget.
Personal Tax Cuts
These measures take effect from 1 July 2020:
Taxable Income Tax Rate Annual Maximum Tax Saving
$18,200 – $45,000 19% $1,935
$45.000 – $120,000 32.5% $2,725
Jobmaker Program
Applies to employers who employ people previously receiving JobSeeker, Youth Allowance or Parenting Payment.
Conditions for employers include:
- Overall increase in number of employees; and
- Employee must work a minimum of 20 hours per week.
Amount receivable is dependant upon age of the employee as follows:
Age Amount Per Week
16-29 $200
30-35 $100
Tax Incentive for Business Investment
From 6 October 2020 until 30 June 2022 businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are first used or installed ready for use.
Temporary Loss Carry Back
For companies with turnover up to $5 billion they will be able to offset tax losses against prior year profits to generate a tax refund. Losses incurred up to 30 June 2022 can be carried back against profits made in or after the 2019 financial year.
Increase R&D Tax Incentive
These changes will take effect from 1 July 2021.
For small companies with turnover less than $20 million the R&D Tax offset will be increased to 18.5% above the company’s tax rate and will remove the $4 million cap on annual cash refunds.
For larger companies, the non-refundable R&D Tax Offset is increased to 8.5% (where R&D Intensity between 0 and 2%) and 16.5% (where R&D intensity above 2%). Eligible R&D expenditure threshold is also increased to $150 million.
Simplifying Superannuation
Employees that change jobs will be able to keep their superannuation fund, stopping the creation of multiple accounts as a result of changing jobs. By 1 July 2021 if an employee does not nominate an account, employers will pay their superannuation contributions to their existing fund.
Should you wish to know more about the impact of the Federal Budget to you please contact us on (07) 3910 5675 or [email protected]