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Federal Budget Summary
What you need to know:
Decrease in individuals tax rate of capital assets:
The changes to the 19% and the 32.5% tax brackets are intended to be brought forward from 1 July 2022 to 1 July 2020. These changes will apply until 30 June 2024.
The changes include:
Raising the 19% tax bracket from $37,000 to $45,000, and
Raising the 32.5% bracket from $90,000 to $120,000
Below is a table outlining the proposed income tax brackets from 1 July 2020:
Full expensing of capital assets:
This measure allows businesses with a turnover less than $5 billion to claim a full up-front tax deduction for the cost of new or used business assets.
This applies to the purchase of capital assets first used or installed between 6 October 2020 and by 30 June 2022. There is no limit to the deduction meaning small and medium sized businesses can expense the full amount of any assets with no limit.
Small business pooling:
Small businesses using the simplified depreciation rules can claim as an expense the balance of their simplified depreciation pool at the end of the 2021 year.
The business owners will receive a tax deduction for the full amount of non-depreciated assets purchased in previous years.
Temporary loss carry-back for companies:
A company can carry back their losses that incurred in the 2019/20, 2020/21, 2021/22 financial years to offset previous tax profits in the 2019, 2020 and 2021 financial years.
This only applies to companies. Sole traders, partnerships and trusts won’t be able to access this benefit.
Eligible companies may elect to receive the tax refund when they lodge their 2020/21 and 2021/22 tax returns.
Super paid to new employee’s existing accounts:
An individual’s superannuation account will be ‘stapled’ to them as they change jobs. This means that new superannuation accounts will no longer be automatically created every time an individual starts a new job.
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