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Welcome to our November monthly newsletter!

The Federal Budget for the 2021 financial year has been recently passed by Parliament and includes a number of income tax cuts, offsets and benefits for taxpayers. Please see below for just some of the changes that affect individuals and business owners:

Individuals:

  • Changes to personal income tax rates – the 19% income tax bracket has been increased from $37,000 to $45,000 and the 32.5% income tax bracket has been increased from $90,000 to $120,000. This means that taxpayers who earn between $37,000 – $120,000 will benefit from a decrease in income tax
  • Changes to the Low Income Tax Offset – the offset has been increased from $445 to $700

Businesses:

  • JobMaker Hiring Credit – a credit of $200/week will be available for each eligible employee between the ages of 16-29 years old and $100/week for each eligible employee between the ages of 30-35 years old. This incentive covers new employees that are hired from 7th of October and will expire after 12 months. An eligible employee has to work at least 20 hours per week, received the JobSeeker Payment, Youth Allowance or Parenting Payment for at least one month within the past three months before being hired and be in the first year of employment with the eligible employer. An eligible employer has no outstanding tax obligations, is reporting through Single Touch Payroll, can show that the hire is for a new job that has been created (e.g. not an employee that has replaced another) and they cannot be claiming the JobKeeper payments or any other wage subsidy.
  • Uncapped immediate write-off for depreciable assets – businesses with an annual turnover of less than $5 billion will be eligible for the immediate asset deduction for assets acquired from 6th of October. Small business pools can also be immediately deducted, claiming the full balance of the pool for the 2021 financial year.
  • Loss carry-back for eligible companies – companies with an annual turnover of less than $5 billion will be able to carry back tax losses from the 2020-2022 financial years to offset previous taxable profits from the 2019 financial year onwards. This will create a refundable tax offset in the year of the loss.

If you have any questions or require assistance in understanding the new taxation rules from the Federal Budget then please contact our office.
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Monthly tax tip:
The uncapped immediate write-off for depreciable assets is a great tax incentive for a small business. This write-off includes eligible assets only such as plant and equipment, motor vehicles, tools, etc. and does not include capital works assets such as buildings and sheds. This write-off is included in the simplified depreciation regime for small businesses and is optional. If a small business chooses to opt-out of the regime, they would usually have to then wait five years to re-enter. However, this has been suspended so a small business can opt-out and opt-in as they please. So, should your business opt-out or opt-in to the regime? Your business may choose to purchase some equipment this financial year but have it depreciated under the general depreciation rules because a taxable loss has already been made and so the immediate deduction is just not required and will be of no benefit. This will allow for a future depreciation deduction in subsequent years and may provide a tax benefit when a taxable profit has been made. If you have any questions about the simplified depreciation regime or would prefer to opt-out this year then please contact our office to discuss your options.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

 

Important Dates!
14 November:

  • Make the October monthly business declaration for the JobKeeper Scheme

21 November:

  • Lodge and pay October 2020 monthly business/instalment activity statement

25 November:

  • Lodge and pay quarter ending 30 September 2020 activity statement if lodging electronically

28 November:

  • Lodge and pay quarter ending 30 September 2020 superannuation guarantee charge statement if contributions were not paid on time

*Superannuation guarantee charge is not tax-deductible

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