Dear Valued Customers,

We would like to update you on Federal Budget 2021-22 in relation to small businesses and individual tax affairs.

 

For Businesses

 

1. Temporary full expensing extended

The Government will extend the 2020-21 temporary full expensing measures for 12 months until 30 June 2023 (originally due to finish on 30 June 2022).

This will allow small businesses with aggregated annual turnover of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 6 October 2020 and first used or installed ready for use by 30 June 2023.

 

2. Loss carry-back extended

Small businesses with aggregated annual turnover of up to $5 billion can currently carry back a tax loss (2019-20, 2020-21 and 2021-22) will be extended to include the 2022-23 income year. For example, losses incurred to June 2022 can be offset against prior profits made in or after the 2018/19 financial year. 

 

3.      Superannuation

  • Super Guarantee $450 per month threshold will be removed from 1 July 2022. As a result, employers will be required to make quarterly Super Guarantee contributions on employees earning less than $450 per month.

 

  • Super Guarantee (SG) rate will increase from 9.5% to 10 % from 1 July 2021, and by 0.5 per cent per year from 1 July 2022 until it reaches 12 per cent from 1 July 2025.

 

For individuals

 

1.      Personal Tax Rate Changes

Personal tax rates unchanged for 2021-22. 19 per cent threshold from $37,000 to $45,000, and the 32.5 per cent threshold from $90,000 to $120,000. Please refer to Individual tax rate table below:

  2020-21 2019-20 2018-19 2017-18
Nil 0-$18,200 0-$18,200 0-$18,200 0-$18,200
19% $18,201-$45,000 $18,201-$37,000 18,201-$37,000 18,201-$37,000
32.5% $45,001-$120,000 $37,001-$90,000 $37,001-$90,000 $37,001-$87,000
37% $120,001-$180,000 $90,001-$180,000 $90,001-$180,000 $87,001-$180,000
45% >$180,001 >$180,001 >$180,001 >$180,001

 

 

2.      Low- and middle-income tax offset (LMITO)

Low-to-middle income earners would have seen their tax refunds in 2022 cut by between $255 and $1,080 (for incomes up to $90,000).

Please refer to the table below:

Taxable income Low and middle income tax offset
Less than $37,000 $255
$37,001 – $48,000 Increasing by 7.5c per $1, capped at $1,080
$48,001 – $90,000 Maximum $1,080
$90,001 – $126,000 Reducing from maximum at 3 cents per $1
$126,001+ $0

 

 

3.      Low- income tax offset (LITO)

The low-income tax offset (LITO) will also continue to apply for 2021-22 income year. The maximum amount of the LITO is $700.

Please refer to the table below.

Taxable income Amount of offset
Less than $37,500 $700
$37,501 – $45,000 Reducing from $700 at 5 cents per $1
$45,001 – $66,667 Reducing from $325 at 1.5 cents per $1
$66,668+ $0

 

  1. Self-education expenses

The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education undertaken by the taxpayer for the purpose of gaining qualifications for use in the carrying on of a profession, business, or trade or in the course of any employment.

The measure will have effect from the first income year after the date of assent to the enabling legislation.

 

  1. Medicare levy low-income thresholds

Changes for Medicare levy low-income threshold are below:

  • For singles – increased to $23,226 (up from $22,801 for 2019-20).
  • For couples with no children – increased to $39,167 (up from $38,474 for 2019-20).
  • For each additional dependent child or student – increased to $3,597 (up from $3,533).

 

The full Budget papers are available at www.budget.gov.au

Should you have any inquiry regarding above matter, please do not hesitate to contact us.

Thank you.