A number of measures announced in the Federal Budget 2020–21 are now law. These are:
- bringing forward the personal tax cuts and the new low income tax offset by two years to 2020–21 – new PAYG withholding schedules are available (see below);
- retaining the low and middle income tax offset for 2020–21;
- introducing a temporary loss carry back for corporate tax entities with an aggregated turnover of less than $5 billion – so a company will be able to carry back losses incurred in 2019–20, 2020–21 or 2021–22 to 2018–19, 2019–20 or 2020–21 and obtain a refundable tax offset when the 2020–21 or 2021–22 income tax return is lodged;
- the full expensing of depreciating assets first held, and first used or installed ready for use for a taxable purpose, at or after 7:30pm on 6 October 2020 and before 1 July 2022 by entities with an aggregated turnover of less than $5 billion;
- extending some small business concessions to medium businesses (annual aggregated turnover between $10 million and $50 million); and
- R&D changes that apply from 1 July 2021.
Some of the measures benefiting medium businesses don’t start until the 2021–22 income year or FBT year (as appropriate) e.g. the simplified trading stock rules and the FBT exemptions for car parking and multiple work-related portable electronic devices. The immediate deduction for certain start-up costs and prepayments apply from the current income year (2020–21).
Tip! Talk to your tax adviser about how to make the best of these new tax concessions.
