The Federal Budget contains a raft of tax changes. We have summarised the relevant tax changes for our clients (with the most relevant at the top).
Temporary full expensing
Business can expense all plant and equipment purchased and installed before June 2023. This is an extension of the previous position of having the asset installed before June 2022.
This is an important measure. Many large capital projects simply could not be completed before June 2022.
Businesses of any size can claim a subsidy of up to $7,000 a quarter per apprentice employed from October 2020 to March 2022.
The subsidy will last for 12 months from employing an apprentice.
Casuals receive compulsory super
Workers earning under $450 per month will now receive compulsory superannuation on their wages.
Work test removed for older Australians
Australians aged between 65 to 74 will no longer required to satisfy the work test to make a tax deductible contribution to their superannuation fund.
First home super saver
The amount of money contributed to, and taken from, superannuation to pay for a home deposit will increase from $30,000 to $50,000
Persons aged over 60 (down from 65) can now contribute the sale proceeds of their home ($300,000 per person) to their super fund without triggering excess non concessional contributions tax.
Loss carry back
Companies that incur a tax loss up to the 2023 year can offset that loss against tax profits made from 2019 onwards.
This was previously available until 2022. Practically few clients (within our practice) are taking advantage of this concession.
Work related education
An tax exclusion stopping the first $250 of education costs will be removed. This quirk was easily overcome so it will reduce the overall costs of preparing a tax return.
Tax Offset – $1,080
The Low and Middle Income Tax Offset will be retained to the 2022 financial year (as previously reported). This will give an extra $1,080 for every person earning under $90,000.
This is more of a confirmation of a previous position.
Delayed recovery of debt
If you dispute a debt with the ATO you are required to still pay the disputed debt. The government will make a new division which can pause the ATO recovery while the division considers your case.
Your business turnover must be under $10m to access this division.
The current tax residency rules are vague and focused on minute details of a persons life. The residency rules will be changed with a simple test.
Employee share schemes
The law regarding employee share schemes will be relaxed. Currently the law on employee share schemes make them effectively unworkable for most medium sized businesses.
Lower tax rate for medical and biotech
For income generated from new patents related to medical and biotech technologies: that income will be taxed at 17% (compared to 30% or 25% for small businesses)
Faster patent tax deductions
Businesses that purchase patents can now claim depreciation based on their estimated useful life rather than the government mandated life.
Technology business spending over $500k on digital games will enjoy tax relief measures.
The remission of excise for small breweries will increase from $100k to $350k.
ATO early relief
The ATO will introduce a new division to speed up the process of applying for a private ruling or obtaining guidance.