Budget Night 2021

The 2021 Federal Budget has been delivered by Treasurer Josh Frydenberg and provides extended tax relief particularly for low and middle income earners and small to medium businesses.

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Key Tax Announcements from the 2021 Budget

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Tax Cuts for Low and Middle Income Earners:

- The Low and Middle Income Tax Offset (LMITO) has been extended for another year (to the end of the next financial year 2021-22). Below is a summary of the proposed LMITO for 2022.

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Income of $37,000 or less --> up to $255 offset

Income of $37,001 to $48,000 --> $255 + 7.5% of excess over $37,000

Income of $48,001 to $90,000 --> $1,080 offset

Income of $90,001 to $126,000 --> $1,080 – 3% of excess over $90,000

Income of $126,001 + --> Nil

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Increasing the Medicare levy low-income thresholds

‍The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year, as below:

- Threshold for singles to increase from $22,801 to $23,226.

- Family threshold to increase from $38,474 to $39,167.

- Threshold for single seniors and pensioners to increase from $36,056 to $36,705.

- Family threshold for seniors and pensioners to increase from $50,191 to $51,094.

For each dependent child or student, the family income thresholds will increase by an additional $3,597 (an increase from the previous amount of $3,533).

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Removal of the $250 reduction for Self-Education Expenses

Currently, the first $250 of a prescribed course of education expense is not tax deductible. With the removal of this exclusion taxpayers with eligible self-education expenses will be able to claim the full amount.

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Small and Medium Businesses (turnover less than 5 billion):

Temporary Full Expensing

- The Government have extended the temporary full expensing to 30 June, 2023. Eligible businesses will be able to claim an immediate deduction for the capital costs associated with the purchase of depreciable business assets.

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Loss Carry-Back

- The temporary loss carry-back has been extended for an additional year up to the 2022-23 income year. Eligible corporate entities that have made taxable losses can claim a refundable tax offset up to the amount of their previous income tax liability.

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‍Superannuation:

- The Government has scrapped the $450 per month threshold requiring employers to contribute super on every $1 earnt.

- The super guarantee rate increase to 10% from 1 July, 2021 is due to come into effect as planned.

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Please note the above announcements are subject to Royal Assent.

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For more information on the budget and how it impacts you, give us a call on 02 9821 2455.