“The Australian economy is well on its way to recovery.” – Josh Frydenberg
With an optimistic spirit and a positive attitude towards growth in the next year, the Federal Budget was announced on Tuesday. While there were quite a few winners (and some less so), there were some key points that should be kept in mind as you plan your next financial steps.
Whether you’re concerned about personal tax rates or your small business, we have the most important updates for you. And as for people concerned about changes to super? Good news, the latest Budget changes have made optimising your super more accessible than ever before.
In exciting news, one group that received a lot of support was small businesses. With recovery from a rough, pandemic-affected year, the Federal Government is looking to support small businesses with some extensions of lifeline policies from last year and some new updates too.
Temporary full expensing: Originally announced last year, the temporary investment tax incentive has now been extended for another year. This allows businesses another chance to take advantage of the incentive. Additionally, businesses with a turnover of less than $5 Billion (so including some not so small businesses) now have the opportunity to deduct the full cost of any eligible assets that they may have bought in service of their business. This even includes the cost of improving existing assets. This change has now been extended to June 30th, 2023.
Temporary loss carry-back provision: Companies are now allowed to use tax losses for an extra 12 months. This period extends through the 2019/20, 2020/21, 2021/22, and now 2022/23 income years. These tax losses can now be used to offset previously taxed profits in 2018/19 or later income years.
When it comes to paying personal income tax, there were some clear winners in this year’s budget. For people earning less than $126,000 per year, the helpful “Low and Middle Income Tax Offset” will apply for another year.
This tax rebate is received after taxpayers complete their returns and varies across the different income brackets.
While the offset was supposed to be finished by June 30 this year, the good news is that it will be extended and now finish next year.For a better idea of how much you might save, check out this quick overview:
|$37,000 or less||$225|
|$37,001 – $48,000||$255 plus 7.5 cents for every dollar above $37,000 up to a max of $1,080|
|$48,001 – $90,000||$1,080|
|$90,001 – $126,000||$1,080 minus three cents for every dollar of the amount above $90,000|
One of the areas that were most dramatically affected by the Federal Budget 2021 is superannuation – but don’t worry, it’s mostly good news!
The main focus is adding more flexibility and better access. Here are the key changes:
One of the most important changes is regarding legacy retirement product conversions.
From July 1st, consumers will have the option to switch to more flexible retirement products. The affected products include market-linked and life-expectancy retirement products commenced before September 20th, 2007 from any provider – including self-managed superannuation funds (SMSFs), and lifetime products from SMSFs.
To provide enough time for these changes, a two-year period will begin on July 1st, 2021 and individuals can begin making changes from this date onwards.
If you’re feeling slightly overwhelmed by all the news and updates around this topic, please reach out to us at Accumulus Advisory.
Our team of specialist advisors are ready to dive in and answer any questions that you may have.
Call us at 03 9377 4400 or email us at firstname.lastname@example.org.