The Federal Budget for 2020 announced personal and business tax relief through various tax cuts. The legislation was approved by parliament meaning, that individuals and businesses will be paying less tax, and have more money to invest and spend into the economy.
Tax relief for Individuals
For individuals, the government has brought forward tax cuts which were initially planned for 2022, now they will be backdated to July 2020. These cuts are set to amount to $17.8 billion and will assist low to middle-income earners.
- the low income tax offset will increase from $455 to $700;
- the top threshold of the 19 per cent tax bracket will increase from $37,000 to $45,000; and
- the top threshold of the 32.5 per cent tax bracket will increase from $90,000 to $120,000.
In 2020‑21, low-and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle-income tax offset (LMITO).
Following is a summary of some tax savings at various income levels:
- An individual with a personal taxable income of $40,000 will receive a tax cut of $580
- An individual with a personal taxable income of $60,000 will receive a tax cut of $1,080
- An individual with a personal taxable income of $80,000 will receive a tax cut of $1,080
- An individual with a personal taxable income of $100,000 will receive a tax cut of $1,530
- An individual with a personal taxable income of $120,000 or more, will receive a tax cut of $2,430
Tax relief for Individuals
Businesses with a turnover of up to $5 billion per year are now able to immediately deduct the cost of eligible depreciable assets as long as they are first used or installed by 30 June 2022.
To complement this, the Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid. Companies can carry back losses incurred in the 2019-20 to 2021-22 years.
Also, businesses with an aggregated annual turnover between $10 million and $50 million will, for the first time, be able to access up to ten small business tax concessions.
These expanded concessions will apply in three phases, as follows:
- From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
- From 1 April 2021, eligible businesses will be exempt from FBT on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.
- From 1 July 2021:
- Eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax and settle excise duty and excise-equivalent customs duty monthly on eligible goods.
- Eligible businesses will generally have a two-year amendment period apply to income tax assessments for income years starting from 1 July 2021.
- The Commissioner of Taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50 million aggregated annual turnover threshold.
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