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.
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.
