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Budget 2021 Summary


The theme of this year was securing Australia's recovery  and making a comeback. Much of it is an extension of last years with a few updates.

*It is important to note, that while we strive to give you the most up to date information as possible, many of these introduced Budget Changes have not yet received Royal Assent. Therefore they are subject to modification, or may not receive Royal Assent. If any of these changes may impact you, I recommend you consult with us before relying on any of the latest Budget changes.

Individuals

  • Low- Middle Income Tax Offset (LMITO) has been extended. It was due to be removed on 01 July 2021. The LMITO is a non-refundable tax offset of up to $1,080 for individual depending on their taxable income.
  • Medicare Levy Low-Income Threshold has been increased
    • Singles from $22,801 to $23,226
    • Families from $38,474 - $39,167 ( for each depended child or student, the family income threshold increases by $3,597).
    • Single Pensioners from $36,056 to $36,705
    • Family Pensioners from $50,191 to $51,094
  • Modernising the Tax Residency Rules
    • A replacement of the existing rules with a simplified new modernised framework.
      • Primary Test with a be a simple 'bright line' test- a person who is physically present in Australia for 183 days or more in any income year will be an Australian Tax Resident.
      • Secondary Tests ( for individuals that fail the Primary Test) that depend on a combination of physical presence and measurable, objective criteria.
  • Removal of $250 non deductible component of Self Education Costs.
  • Full income tax exemption for ADF personnel deployed to Operation Paladin
  • Home Ownership Funding Package.
    • First Home Super Saver Scheme. From 1 July 2022, the Government will increase the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.
    •  From 1 July 2021, 10,000 guarantees will be made available over four years to eligible single parents with dependants to build a new home or purchase an existing home with a deposit of as little as two per cent, subject to an individual’s ability to service a loan.
    • The Government is providing a further 10,000 places under the New Home Guarantee in 2021-22, specifically for first home buyers seeking to build a new home or purchase a newly built home with a deposit of as little as five per cent.

Businesses

  • Temporary Full Expensing of Depreciation Assets Extension.
    • Eligible Small Businesses will be able to IMMEDIATELY deduct any eligible depreciating asset purchase in full on purchase. This applies to any asset purchased from 7:30pm on 06th October 2020 until June 30, 2023.- Note this does not include Capital Works (e.g. Buildings)
  • Loss Carry Back (Companies) Extension
    • Eligible Companies that have made a loss in , 2020, 2021,2022 or 2023 can elect to have the loss carried back to a previous profit year in the 2019 or later Financial year. This is designed to free up cash flow for small businesses. Tax Refunds will be limited to the relevant year taxable profits.
  • Digital Economy Strategy
    • From 1 July 2023, taxpayers will be able to self-assess the effective lives of eligible intangible depreciating assets, such as patents, registered designs, copyrights and in-house software. (this will apply once the Temporary Full Expensing has concluded).
    • The Government will provide $18.8 million over 4 years from 1 July 2022 for a Digital Games Tax Offset to provide 30% refundable tax offset for qualifying Australian digital games expenditure ongoing.
    • The Government will provide $200.1 million over 2 years from 1 July 2022 to develop and transition government services to a new enhanced myGov platform, providing a central database for Australians to find information and services online.
  • Debt Recovery for Small Business
    • Small Businesses with aggregated turnover of less than $10 million per year, can apply to the Small Business Taxation Division of the Administrative Appeals Tribunal to pause or modify the ATO Debt Recovery Actions (such as garnishee notices, general interest charges, where the debt is being disputed in the Tribunal).
  • Tax Treatment of Qualifying Storm and Flood Grants
    • Income Tax Exemption for qualifying grants made to primary producers and small businesses affected by the storms and floods in Australia.

Superannuation

  • Removal of Work Test for Voluntary Contributions
    • If you  are aged 67- 74, you will be able to make non-concessional contributions  and salary sacrifice contributions without needing to meet the work test ( subject to existing caps).
    • If you are aged 67-74 and wish to make personal deductible contributions however, you will still need to meet the work test.
  • Reducing the Age Limit for Downsizer Contributions
    • The Current Age limit to be eligible to use the Downsizer contribution is 65, and this will be reduced to 60 from the first income year that the Royal Assent enables legislation.
  • Removing the $450 per month threshold for Superannuation Guarantee
    • This will enable more employees to be eligible for superannuation.
  • Relaxation of Residency requirements for SMSF's
Read the full Budget Report here
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