On 6th October 2020, Treasurer Josh Frydenberg handed down a historic Federal Budget. In a year of fires, drought and a global pandemic, the Government has seen the budget deficit blow out to $213.7 billion or 11 per cent of gross domestic product (GDP).
The Federal Budget 2020-21 theme centred around job creation, personal tax cuts and investment. It sent a clear message to the Australian people that the Federal Government was ready to start the journey towards rebuilding the economy and securing Australia’s future.
HLB Mann Judd’s Federal Budget Alert provides a succinct summary of the Government’s economic recovery plan including details related to personal and business taxation and superannuation.
Some of the key areas of focus for the Federal Budget 2020-21 include:
- Personal tax cuts – the centrepiece of the Budget was the bringing forward of stage two of the previously announced tax cuts from 1 July 2022, not just to 2021, but backdated to 1 July 2020. This was a surprise move, and one that provides a more immediate cashflow benefit.
- Tax concessions for small business – Business taxes were a key focus of the Budget, with the government wanting to do everything possible to help drive economic activity, especially as JobKeeper continues to wind down.
- Instant asset write-off concessions – Another major area is further changes to the rules on outright deductions for capital asset purchases, with all business having aggregated turnover up to $5 billion being able to deduct the cost of new depreciable assets (subject to the normal luxury car limits) purchased from Budget night (October 6) up to 30 June 2022.
- Loss carry-back rules – The next major initiative is the temporary re-introduction of loss carry-back rules, which existed briefly in 2013. Any corporate entity with aggregated turnover of less than $5 billion may choose to carry-back the benefit of losses from the 2020, 2021 or 2022 years where tax has been paid in 2019 or later years.
- Superannuation – There were only minor changes to superannuation this year, focused around improving efficiency for members of larger funds.
Read more of our summary here: The COVID Stimulus Budget – What’s In It For Me?Download