The Australian Budget 2020 was released on 6 October 2020. There are big tax cuts for individuals and a number of significant boosts for businesses, all designed to increase spending and boost jobs. With an economy ravaged by the effects of COVID-19, the big spending Federal Budget is designed to get the Australian economy moving.
Individuals from 1 July 2020:
- The top threshold of the 19% personal income tax bracket will be increased from $37,000 to $45,000.
- The top threshold of the 32.5% personal income tax bracket will be increased from $90,000 to $120,000.
The ATO will implement the cut immediately by updating their PAYG withholding schedules so employers can deduct the new, lower amounts of tax that apply to income.
In addition, the Low and Middle Income Tax Offset (LMITO) will be retained for the 2020-21 income year. This was originally intended to be removed when the changes to tax thresholds were introduced but with the early introduction of the new tax thresholds, the government has decided to retain the offset for this year, meaning that taxpayers will benefit both from the change in thresholds and the LMITO.
For Business: there are two significant tax breaks included in the Budget.
- Instant asset write-off deduction for capital assets acquired by small businesses.
- From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with a turnover up to $5 billion will be able to deduct the full cost of eligible capital assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted. This means that businesses can now immediately deduct the full cost of all purchases of items such as: Plant and machinery – Fixtures and fittings – Technology, such as laptops and computers – Motor vehicles such as utes, vans and most cars.
The Government will also allow companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid, to generate a refund. Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. With many companies expecting to make losses this year due to COVID-19, these companies may elect to receive a tax refund from the ATO for the tax they paid in earlier years back to 2018-19 when they lodge their 2020‑21 and 2021‑22 tax returns.
South East Access can help individuals and businesses with
- Tax returns
- Sole trader & partnerships returns
- Self managed super funds
- BAS preparation
- Job Keeper applications
- Financial statement preparation
- Property investment tax advice
- Tax planning and advice
- Company & Trust Accounting