This year’s budget was definitely aimed at business rather than individuals, and it needed to be. The main goal of the federal budget is to create jobs to repair the damage that Covid has done to the economy and Australian community.
Therefore, if you already have a job, there’s not much good news for you in the budget. However, there is plenty of good news for the Australian economy which will probably enhance the share market and property investment returns.
What’s in it for individuals?
The major benefit contained in the budget for individuals was income tax cuts. These tax cuts are backdated to begin on 1 July 2020. The table below sets out the tax savings (second column from the right) that you may enjoy.
The budget also included some other miscellaneous benefits, which are listed below.
Improving the super industry and performance
The government will direct employers to pay super into existing accounts (as advised by the ATO) to avoid opening a new account with a new super fund when you start a new job. This will avoid workers unknowingly accumulating multiple super accounts.
The government will also take measures to improve the accountability and transparency of super funds, which is a problem I have
written about previously. This includes building a MySuper website which will allow people to rank investment returns and fees. Any improvements in this space are long overdue.
Interestingly, the government did not announce that it would postpone the increase to the compulsory super contribution rate from 9.5% to 10% p.a. At this stage, this is still set to begin on 1 July 2021.
Granny flat arrangements
Granny flats will now be exempt from CGT where a formal written agreement is in place.
Relaxing the paid parental leave qualification criteria
Parents will qualify for parental leave payments if they have worked in 10 of the last 20 months, instead of 10 of the last 13 months, preceding the birth or adoption of a child. This is to accommodate the impact of Covid.
Additional government grantees for first home buyers
The government will make available an additional 10,000
First Home Loan Deposit Scheme guarantees in the 2020/21 financial year. This arrangement allows first home buyers to borrow up to 95% of a property’s value without needing to pay for Lenders Mortgage Insurance (LMI).
Summary of major incentives for business
The below sets out a list of incentives for businesses:
§ Full write off of any capital expenses (no cap) incurred before 30 June 2022 for businesses with a turnover of less than $5 billion. This means large business will be able to get a full tax deduction for any asset purchases they make over the next 2 years.
§ If a business makes a loss in the 2020/21 and/or 2021/22 financial years, they can offset that loss against tax previously paid in the 2018/19 and 2019/20 financial years. This means they may receive a refund of tax previously paid.
§ If businesses employ an apprentice between 5 October 2020 and 30 September 2021, they will be able to claim a reimbursement of up to 50% of their wages up to a maximum of $7,000 per quarter.
§ Eligible businesses will be entitled to a credit of $200 per week for one year beginning 7 October 2020 for each new employee they hire that is aged between 16 and 29 years (or $100 per week if aged between 30 and 35 years).
§ The go
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