Federal Budget 2021-2022 without political spin
Image source: https://www.intheblack.com/articles/2021/05/11/federal-budget-2021
Josh Frydenberg has handed down his third federal budget, and we have heard or read most of the major announcements in recent days already. But here is a summary of what was announced:
Personal Income Tax
The tax rates remain unchanged from 2021, with the next tax cuts scheduled to take place in the 2024 – 2025 financial year as previously proposed.
As already announced in the press several days ago, the low and middle income tax off-set to support middle income earners has been extended into the 2021 – 2022 financial year. This will provide tax cuts of up to $1,080 for individuals, and up to $2,160 for dual income couples.
For taxpayers that undertake studies to advance their employment prospect, they will be able to claim the full self-education expenses in the first year after the legislation receives royal assent (currently, the first $250 were not able to be claimed as a deduction).
For Businesses
To encourage businesses to continue to invest, businesses with turnover of less than $5B can continue to fully expense costs of eligible equipment purchased until 30 June 2023.
The loss carry-back provisions that allow eligible companies to claim tax losses against prior years’ profits have been extended to include the 2022 – 2023 financial year.
Superannuation guarantee contribution rate for employees will increase from 9.5% to 10.00% from 1 July 2021 as previously announced. Additionally, the superannuation guarantee threshold of $450 pm will be removed from the same date. This means that casual and part-time workers who may have missed out on superannuation guarantee contributions will now be receiving superannuation contributions from their employers.
Also from 1 July 2021, the excise refund cap will increase to $350,000 for small brewers and distillers.
From 1 July 2023, taxpayers can self-assess the effective life of certain assets used in their business, without having to rely on the current statutory rates.
Superannuation
The work test requirement for taxpayers aged less than 75 years will be removed from 1 July 2022, to allow them to make non-concessional and salary sacrificed contributions.
Also from 1 July 2022, the eligible age for “downsizer” contributions to be lowered from 65 years of age, to 60.
The amount that can be withdrawn to pay for first homes will be increased from $30,000 to $50,000.
The Hunter
Other than the already started upgrade to the Williamtown RAAF base, the only other announcement for the region is the $66M upgrade to Newcastle Airport, which is to be spent over the next 2 financial years. However, the government has identified that the M1 Pacific Motorway upgrade to Raymond Terrace is a high priority. This includes the widening of the highway at Hexham to 3 lanes in each direction.
Health
There will be an increase in funding for COVID-19 management, including more funding for telehealth, as well as extra funding for the vaccine rollout.
Increase in funding will also be made for mental health, and aged care.
Families and Community
Families have been included in this year’s budget, with an increase in subsidies for childcare from 85% to a maximum of 95%.
Up to 10,000 single parents with dependent children can access Family Home Guarantee where they will only need to have 2% deposit for their home loan, with the government guaranteeing the other 18% to avoid having to pay for loan mortgage insurance.
The First Home Loan Deposit Scheme will be extended from 1 July 2021 to 30 June 2022, to allow up to another 10,000 eligible first home buyers to purchase a new home with only 5% deposit, while the government guarantees the other 15% to participating banks.
Summary
There were other announcements made in the budget that we have not included here. If you would like to know about these, or about the announcements mentioned above, then our friendly team is here to help.