Federal Budget 2021-22: who benefits?

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Budget 2021-22

We expected the Federal Budget 2021-22 to continue to stimulate small businesses and to boost business confidence.  Here is an overview of the Federal Budget 2021-22 announcements and what they mean for small businesses.

The Budget announced an extension to temporary full expensing and loss carry-back’s to 2023, broadening the AAT’s powers to pause ATO recovery actions and Tax relief for individuals and certain industries including brewers and distillers, games developers and medical & biotech.

Tax cuts for low/middle income earners in 2021-22

To support household income and create more jobs, the Budget retained the low and middle income tax offset which is worth up to $1,080 for individuals or $2,160 for dual income couples.

Limitless Instant asset write-off for SME's up to 30 June 2023

The Budget has extended this measure to 30 June 2023 (initially a COVID-19 stimulus package) which applies to new or second hand depreciable assets ($59,136 cap remains for passenger vehicles) to bring forward investment to access the tax benefits.

Loss carry back extended to 2023: reclaim tax paid on prior years

The budget extended the loss carry-back scheme to allow companies to claim back taxes paid on previous year’s profits if they are now in a loss. This means SME's can claw back some of the taxes they paid in prior years.

Discounted Tax rate for Medical & biotech patents from 1 July 2022

The patent box encourages businesses to undertake their R&D in Australia and keep patents here in return for a 17 per cent effective concessional
corporate tax rate.

AAT given power to pause ATO recovery actions during disputes

Gives small and family businesses peace of mind in ATO debt-recovery situations, helping ensure the tax system workes for them, not against them.

Tax relief for brewers and distillers

From 1 July 2021, all eligible brewers and distillers will receive full remission (up from 60%) of any excise they pay on the alcohol they produce up to a cap of $350,000 each financial year.

Introducing Digital Games Tax Offset from 1 July 2022

Provides eligible game developers with a 30 per cent refundable tax offset for qualifying Australian games expenditure (minimum of $500,000 qualifying expenditure). Eligibility criteria and definitions will be considered via stakeholder consultation.

Removing $250 threshold for Self-education expense claims

This will reduce compliance costs for individuals and increase their potential tax refund by no longer limiting the deduction to amounts spent over $250. This will come to effect from the first income year after the date of Royal Assent of the enabling legislation.

Deferring the taxing point of Employee Share Schemes

Employment termination/departure will no longer be a trigger for tax on employee share schemes, therefore, the measure will result in tax being deferred up to a maximum of 15 years.

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