2021 Federal Budget Updates

Business Updates

Instant Asset Write Offs has been extended to 30 June 2023.

Claw Back of Tax Losses – the loss carry-back measure will be extended to allow eligible companies to also carry back tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.

Flood and Storm Grants – The Government will provide an income tax exemption for qualifying grants made to primary producers and small businesses affected by the storms and floods in Australia for rainfall events between 19 February 2021 and 31 March 2021.

Superannuation Updates

SGC Minimum threshold – The current $450 per month minimum income threshold for SG contributions is being removed. The measure will have effect from the start of the first income year after Royal Assent expected to occur prior to 1 July 2022.

The Government will relax residency requirements for SMSFs and small APRA-regulated funds to continue to contribute to their superannuation fund whilst temporarily overseas, ensuring parity with members of large APRA regulated funds.

The work test has been removed for individuals aged 67 to 74 who want to make non-concessional contributions to their super fund. In addition, the age limit for making downsizer contributions has been reduced from 65 to 60 years of age.

First Home Scheme – The Government will increase the maximum releasable amount of voluntary concessional and non-concessional contributions under the FHSS scheme from $30,000 to $50,000, to assist first home buyers in raising a deposit more quickly

Individual Tax Updates

Self Education Expenses – The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education. Removing this $250 exclusion is expected to reduce compliance costs for individuals claiming self education expense deductions. This measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.

The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year.

The Government has announced that it will retain the Low and Middle Income Tax Offset (LMITO) for one more income year. It is still in addition to the Low Income Tax Offset (LITO) and remains at a maximum $1,080 depending on your personal circumstances.

Tax residency rules simplified to include a primary test, where physical presence for 183 days or more any any income year will be classified as an Australian tax resident.

Employee Share Scheme – There will be a cessation of employment’ taxing point for tax-deferred Employee Share Schemes (‘ESS’). This change will apply to ESS interests issued from the first income year after the date of Royal Assent of the enabling legislation. This will reduce red tape for ESS.

If you have any questions about the budget, please do not hesitate to contact us.