Federal Budget Summary – Business Tax Changes
Temporary Full Expensing extended for another year
From 7.30pm AEDT on 6 October 2020 until 30 June 2023 (previously 2022), temporary full expensing allows a full deduction for:
- the business portion of the cost of new eligible depreciating assets for businesses with an aggregated turnover under $5 billion
- the business portion of the cost of eligible second-hand assets for businesses with an aggregated turnover under $50 million.
- the balance of a small business pool at the end of each income year in this period for businesses with an aggregated turnover under $10 million.
Eligible assets must be first held, and first used or installed ready for use for a taxable purpose, between 7.30pm AEDT on 6 October 2020 and 30 June 2023.
It is important to note that the car depreciation limit still exists, meaning the maximum that can be deducted for a car in 2021 and beyond is still only $59,136.
Removing the $450 per month threshold for super guarantee payments
The current $450 per month minimum income threshold will be removed meaning more employees will now be entitled to receive mandated contributions (generally 9.5% of your gross pay) from their employers.
This measure will take effect from the first tax year after it receives Royal Assent – expected to be 1 July 2022.
Other changes affecting businesses
- Temporary loss carry-back extended – eligible companies can now carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 year.
- Digital economy strategy – the Government will provide tax incentives for intangible assets (patents, copyrights, in-house software) and refundable tax offsets for qualifying Australian digital games expenditure.
- Debt recovery – the Government will allow small businesses with aggregated turnover of less than $10 million per year to apply for a pause on ATO debt recovery actions, such as garnishee notices, where the debt is being disputed in the tribunal.
- Tax treatment of grants – tax exemption provided for qualifying grants given to primary producers and small businesses affected by the storms and floods in Australia between 19 February 2021 and 31 March 2021.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances
