Personal tax cuts
Effective 1 July 2020
The Government has announced it will bring forward, by two years, stage two of the previously legislated tax cuts that were due to take effect from 1 July 2022. As a result, from 1 July 2020:
the Low Income Tax Offset (LITO) will increase from $445 to $700. The increased LITO will be reduced at a rate of 5 cents per dollar for taxpayers that have taxable incomes between $37,500 and $45,000. The LITO will then be reduced at a rate of 1.5 cents per dollar for taxpayers that have taxable incomes between $45,000 and $66,667.
the top threshold of the 19% tax rate will increase from $37,000 to $45,000, and
the top threshold of the 32.5% tax rate will increase from $90,000 to $120,000.
The Government has also announced that the Low and Middle Income Tax Offset (LMITO), which was due to be removed with the commencement of the stage two tax cuts on 1 July 2022, will be maintained for the 2020-21 year only.
The following chart shows the tax cuts individuals are proposed to receive this financial year (2020-21).
Business incentives
The Government will support businesses to invest, grow and create more jobs through targeted tax incentives.
Temporary full expensing
Effective 6 October 2020
Businesses with aggregated annual turnover below the relevant threshold will be able to deduct the full cost of eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 (Budget night) and first used or installed by 30 June 2022.
Full expensing in the year of first use will apply to new depreciable assets and the cost of improvements to existing eligible assets for businesses with aggregated annual turnover of less than $5 billion.
Full expensing also applies to second-hand assets for small and medium-sized businesses with aggregated annual turnover of less than $50 million. Full expensing does not apply to second-hand assets for businesses with aggregated annual turnover of $50 million or more.
Temporary loss carry-back
Effective from 2019-20
Under the existing rules, companies are required to carry losses forward to offset profits in future years.
The Government has announced that it will allow companies with aggregated annual turnover of less than $5 billion to carry back tax losses from 2019-20, 2020-21 or 2021-22 income years to offset previously taxed profits in the 2018-19 or later income years.
Eligible corporate tax entities can elect to apply tax losses against taxed profit in a previous year, generating a refundable tax offset in the year in which the loss is made. The tax refund is limited by requiring that the amount carried back is not more than the earlier taxed profit, and cannot result in a franking account deficit.
The tax refund will be available on election by eligible companies when they lodge their 2020-21 and 2021-22 tax returns. Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.
JobMaker hiring credit
Over three years from 7 October 2020
To support organisations in taking on new employees, the Government proposes to pay a hiring credit for up to 12 months for each new job. This is available from 7 October to employers who hire eligible employees aged 16 to 35.
The credit will be paid quarterly in arrears at the rate of $200 per week for those age 16 to 29, and $100 per week for those age 30 to 35. Eligible employees are required to work a minimum of 20 hours per week and receive the Job Seeker Payment, Youth Allowance (other) or Parenting Payment for at least one month out of the three months prior to when they are hired.
To be eligible, employers will need to demonstrate an increase in overall employee head count and payroll for each additional new position created.
Apprenticeships wage subsidy
From 5 October 2020
From 5 October 2020 to 30 September 2021, businesses of any size will be able to claim a new Boosting Apprentices Wage Subsidy for new apprentices or trainees who commence during this period.
Eligible businesses will be reimbursed up to 50% of an apprentice or trainee’s wages worth up to $7,000 per quarter, capped at 100,000 places.
The wage subsidy will support school leavers and workers displaced by the Coronavirus-related downturn to secure sustainable employment.
Social Security
$250 Economic Support Payments
Effective December 2020 and March 2021
The Government is providing two separate one-off Economic Support Payments of $250 to individuals receiving eligible income support payments or concession cards.
The $250 payments will be paid progressively from December 2020 and March 2021.
Eligible individuals must be in receipt of the following payments as at 27 November 2020 and/or 26 February 2021:
Age Pension (including Age Pension (Blind))
Carer Allowance*
Carer Payment
Commonwealth Seniors Health Card
Disability Support Pension (including Disability Support Pension (Blind))
Double Orphan Pension*
DVA Gold Card
DVA Payments
DVA Seniors Card
Family Tax Benefit (fortnightly recipients)*
Family Tax Benefit (lump sum recipients)*
Pensioner Concession Card (PCC) holders (covers non-income and asset test PCC holders and customers who have an extended entitlement to a PCC even though their payment has stopped).
* if they are not receiving a primary income support payment