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Some key date coming up for October and November. Also more JobKeeper reminders.

I know you have probably been bombarded with information on...

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The COVID-19 Pandemic has forced business to restructure their affairs and adapt to the new landscape. Government too has the opportunity to...

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As part of the federal Government’s JobMaker Plan, announced in the budget, eligible companies will temporarily be able to carry back tax loss. This...

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2020 Budget Snapshot

The COVID-19 Pandemic has forced business to restructure their affairs and adapt to the new landscape. Government too has the opportunity to implement wide ranging, and long overdue reforms around taxation and funding of services such as health, education and childcare, or undertake significant infrastructure development to change the productive landscape of our country. Instead, this budget has relied heavily on handing out incremental changes to as many people and parts of the economy as possible, in the hope we will generate more jobs to payback the debt.

We’ve already got JobSeeker, and JobKeeper, but we’ll soon also have JobTrainer, and JobMaker, just incase we’ve forgotten the governments pitch, that the budget is all about “Jobs”. 

JobTrainer will provide funding for 50% of the wages cost of new trainees or apprentices hired from 5 October 2020 through to 30 September 2021, capped at $7,000 per employee per quarter, with up to 100,000 places available.

JobMaker will provide a cash rebate of $200 per week for 12 months to subsidise the wages of new employees aged 16 – 29, or $100 per week for employees aged 30 – 35.  The new employees must work at least 20 hours per week, and had to have received either JobSeeker, Parenting Payment, or Youth Allowance at some stage during the past 3 months.  To be eligible, businesses must also show that their overall employee head count has increased, and that their payroll expenditure has increased as a result of hiring the new employee.

Personal Income Tax Cuts – Bringing forward stage 2 of the personal income tax cuts and backdating them to 1 July 2020.  People on incomes between $45,000 - $90,000 will receive a tax reduction in their pay of about $20 per week.  Those earning $120,000 or more will receive a tax reduction in their pay of about $46 per week.  Legislation has now been passed to enact these changes, and the ATO have now published the new withholding tables.  Businesses have up until the 16th of November 2020 to implement the changes in their payroll system.  The Low and Middle Income Earners Offset of up to $1,080 has been retained for this year though, so that will essentially double the benefit for this year by the time people lodge their 2021 tax returns.  Individuals will also receive the balance of the $20 - $46 per week reduction above when they lodge their 2021 tax returns, for the period 1 July through to the change in their payroll system.

Instant Asset Write-Off.  This has been extended exponentially with now no cap on the amount you can spend and immediately deduct the cost of new plant & equipment purchased and installed ready for use by 30 June 2022.  At the start of the COVID-19 pandemic this was increased to $150,000 per asset for businesses with a turnover up to $50M.  Now, any business with a turnover under $5Bn can immediately deduct the cost of new plant & equipment, without any cost ceiling, but it must be a NEW asset.  For businesses with turnover less than $50M, they can apply the immediate write off rule for both new or second hand assets.  Those businesses with annual turnover between $50 - $500M can also apply the write off rules to second hand assets costing less than $150,000 provided they are purchased by the end of December this year, and installed ready for use by 30 June 2021.

This immediate deduction rule also has an effect on those businesses with a turnover less than $10M that currently use depreciation pools.  These clients usually get to claim 30% of the remaining balance in their pool this year, but in the 20/21 Financial Year they will be able to fully write off the remaining balance in their pool, regardless of the value of the opening value.

 These rules are a great short term relief for profitable businesses, but you’ve got to remember that its just bringing forward deductions that you would have claimed in future years.  They also don’t normally help people who haven’t made a profit, because there is no extra tax return for making a bigger loss.  That will now change temporarily for those operating through a company structure so that you can offset any tax loss you incur in the 2020, 2021 or 2022 year against tax you’ve paid on profits made in the 2019 or later financial years.