Budget 2020-21: The JobMaker Budget

The budget delivered by Prime Minister, Scott Morrison, last Tuesday night was all about getting the economy moving after the shut-down caused by Covid-19. The theme of the budget was getting people back into work and tax cuts. So, what does this mean for small business?

Uncapped write-off for eligible business assets

The instant asset write-off concession will be available to businesses with an aggregated annual turnover of less than $5 billion, enabling them to deduct the full cost of new eligible depreciating assets acquired from 7.30 pm on 6 October 2020 and first used and installed by 30 June 2022.

Furthermore, small and medium sized businesses (turnover less than $50 million) can also deduct the full cost of second hand assets.

Company Loss Carry Back

The company loss carry-back provisions are being re-introduced. This is a process that will allow companies with aggregated turnover of less than $5 billion who have paid tax in the past, but who are now in a tax loss position, to carry their tax loss back to the past years to obtain a tax refund.

Losses in financial years 2020, 2021 and 2022 years can be carried back to offset against taxable incomes from the 2019 financial year and subsequent years.

Companies can elect to claim the tax refund when they lodge their tax returns for the 2021 and 2022 financial years.

JobMaker Hiring Credit

Eligible employers will be able to claim $200 a week for each additional eligible employee they hire aged 16 to 29 years old and $100 a week for each additional eligible employee aged 30 to 35 years old. This will apply to new jobs created from 7 October 2020 to 7 October 2021 and will attract the credit for 12 months from the date the position is created. The maximum credit is $10,400 for each new position created and cannot exceed the increase in payroll.

Eligible employees must:

• Have worked 20 paid hours per week on average for the full weeks they were employed

• Have received the JobSeeker payment, Youth allowance or Parenting payment for at least one month within the past three months before they were hired

• Be in their first year of employment with this employer and must be employed for the period that the employer is claiming for them

• Can be permanent, casual or fixed term

Wage Subsidy for New Apprentices

Businesses that take on a new apprentice or trainee will be eligible for a 50% wage subsidy starting 5 October 2020. This subsidy is available to employers of any size, however the subsidy is only available for the first 100,000 workers that apply.

Expanded FBT Exemptions

Starting from 1 April 2021 FBT exemptions will apply to car parking and multiple work related portable electronic devices for all business with an aggregated turnover of less than $50 million.

Individual Tax Cuts

Stage 2 of tax cuts has been brought forward to take effect from 1 July 2020. The new tax rates will be:

Taxable income Tax payable

$0 to $18,200 Nil

$18,201 to $45,000 (previously $37,000) 19 cents for each $1 over $18,200

$45,001 to $120,000 (previously $90,000) $5,092 plus 32.5 cents for each $1 over $45,000

$120,000 to $180,000 $29,467 plus 37 cents for each $1 over $120,000

$180,001 and over $51,667 plus 45 cents for each $1 over $180,000

The Australian Taxation Office has advised that they will publish updated tax withholding schedules once the amendments have been passed by Parliament. They will then work with the payroll software providers to ensure that the tax cuts are passed on quickly. There will be no refund for taxes overpaid from 1 July until the new tax rate are implemented until lodgement of your 2021 income tax return.

This is just a snap-shot of the budget measures announced regarding small business and personal tax cuts. Click here to read about all of the measures announced in the budget.

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Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.