7 October 2020
- Temporary full expensing of asset purchases
From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
- This replaces the ‘Instant Asset Write-off’ that was limited to purchases of up to $150,000 and was due to finish 31 December 2020
- Includes improvements to existing eligible depreciable assets
- Includes the purchase of second-hand assets for businesses with turnover less than $50 million
- Larger businesses [turnover greater than $50 million] get an extension of the existing $150,000 write-off from 31 December 2020 to 30 June 2021
- Temporary loss carry-back provisions
For companies with turnover up to $5 billion, losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns. This must not generate a franking account deficit.
Budget example, IA write off and loss carry-back
ABC Pty Ltd has aggregated annual turnover of $50 million for the 2021-22 income year. On 1 July 2021, ABC purchases a Header for $1 million, exclusive of GST.
ABC’s taxable income for 2021-22 was $500,000 before the purchase. Without temporary full expensing, ABC would claim a tax deduction of around $300,000, resulting in a taxable profit of $200,000, and a tax bill of $60,000.
Under temporary full expensing, ABC will instead deduct the full cost of the asset of $1 million, resulting in a tax loss of $500,000.
Under temporary loss carry-back, ABC offsets this tax loss against profits in 2018-19, resulting in a tax refund of $150,000. Without the refund, the company may have had to defer the investment until their cash flow position recovered, or may not have purchased the new header at all.
- JobMaker hiring credit
Available from 7 October 2020 to 6 October 2021, Employers can claim an amount per week for new younger employees hired as follows:
16-29 years of age = $200 per week
30-35 years of age = $100 per week
- The employee must have previously been on JobSeeker, Youth Allowance or the Parenting Payment for at least one of the previous 3 months at the time of hiring
- Employers must also use this to increase the overall headcount of employees e.g. cannot terminate older employees and replace with younger employees to attract the credit.
- New employees must work at least 20 hours per week
- Employers must be reporting payroll through Single Touch Payroll [STP]
- Drought support
The budget sets out $155.6m for drought support, including:
- $50m in 2020-21 for the On-farm Emergency Water Infrastructure Rebate Scheme;
- $19.6m in 2021-22 to extend the drought function of the National Drought and North Queensland Flood Response and Recovery Agency for a further year; and
- $86m over four years to establish eight Drought Resilience and Adoption Hubs.
- Regional Australia
- The budget includes $A2 billion in concessional loans for farmers, and $A2 billion for water infrastructure projects across the country to expand the national water grid.
- $A350 million has been allocated to support regional tourism, while $A317 million is earmarked for exporters to continue to access global supply chains.