2020 Federal Budget 6 October 2020 - Michael Croker CA Australian Tax Leader Tony Negline CA Superannuation Leader - Chartered Accountants

2020 Federal Budget
                          6 October 2020

      Tony Negline CA      Michael Croker CA
Superannuation Leader   Australian Tax Leader

Rosy economic forecasts?

 Source: Budget Paper No 1

Access extended to SMEs will aggregated turnover of less than
$50 million per annum (previously $10 million)

From 1 July 2020, SMEs can immediately deduct certain:
• start-up expenses
• prepaid expenditure (12 month rule)

From 1 July 2021, SMEs can::
• use simplified trading stock regime (no year end adjustments)
• access GDP adjusted method for PAYG instalments
• have 2 years to amend an income tax assessment
• apply to defer settlement of excise duty to monthly cycle (not weekly)
• use ATO’s simplified GST accounting method determination

From 1 April 2021, access FBT exemptions for car parking and multiple
work-related portable electronic devices

Employer provided             Employee pays for
re-skilling training          re-skilling training

From 2 October 2020, FBT
                               Government will consult.
 exemption for employer-
                                TR 98/9 – Income tax:
  provided retraining and
                                  deductibility of self-
 reskilling, for employees
                                 education expenses
 who are redeployed to a
                             incurred by an employee or
    different role in the
                                 a person in business
          business.

Businesses that take on a new
apprentice or trainee will be eligible for
a 50% wage subsidy starting 5
October 2020.

Subsidy is capped at 100,000
workers.

Available to employers of any size or
industry.

 Details on eligibility and applications:
 https://www.employment.gov.au/boosting-apprenticeship-commencements

See also the Board of Taxation review: https://taxboard.gov.au/node/1276

5%
  deposit

• An additional 10,000 First Home Loan Deposit Scheme places will be provided
  for the 2020-21 financial year.
• Refer NHFIC website: https://www.nhfic.gov.au/what-we-do/fhlds/

Resident individual rates for 2020-21

 Refer: Treasury Laws Amendment (A Tax Plan For The Covid-19 Economic Recovery) Bill 2020

Resident individual rates for 2020-21

LITO and LMITO
Low income tax offset
Budget increases LITO from a maximum amount of $455 to
$700 per annum for the 2020–21 income year and future
years.

Low and middle income tax offset
LMITO was to be repealed when the relevant threshold
changes came into effect and the LITO was increased.

As a result of the Budget, LMITO will continue to be
available for the 2020–21 income year then removed for
the 2021–22 income year and later years.

Non-resident individual rates

PAYG Withholding
ATO will publish updated tax withholding schedules once:
• the amendments pass Parliament, or
• there is public bipartisan support for the Bill which contains the amendments to
  bring forward the tax cuts as announced.

Updated tax withholding schedules will be published at ato.gov.au/taxtables

ATO will work with payroll software providers

PAYG Instalments
Tax cuts have not been included when calculating PAYG Instalment shown on the
September quarter Activity Statements. The changes will be reflected in the
December Activity Statements. In most cases this will result in a wash-up of any
over payments that occurred for earlier periods.

“The adjustments to the withholding schedules are designed to ensure that
taxpayers have the correct amount of tax withheld from their pay going
forward.

“It is not possible for the ATO to determine the extent of ‘over-withholding’
that may have occurred for each and every taxpayer as this is highly
dependent on individual circumstances and will be different for everyone.

“Any ‘over-withholding’ that occurred prior to the employer updating their
payroll software and processes will be included in the tax assessment of
the employee at the end of the income year.

 Source: https://www.ato.gov.au/Media-centre/Media-releases/Updates-to-tax-
 withholding-schedules/

Uncapped write-off for eligible businesses
 Eligible business          Date range for when         Threshold
                            asset first used or
                            installed ready for
                            use
 Less than $500 million     12 March 2020 to            $150,000
 aggregated turnover*       31 December 2020
                            30 June 2021
 Less than $5 billion       By 30 June 2022             Deduct full cost
 aggregated turnover

* Note: For eligible businesses with an aggregated turnover from $10 million to
less than $500 million, the $150,000 threshold applies for assets purchased from
7.30pm (AEDT) on 2 April 2019.

Eligibility and operation

                             2021        2022
 Tax Loss Years 2020        Lodged      Lodged

Taxed
                                     Franking Account
Profit   2019    2020       2021          Dr Cr

Years

Residency
Board of Taxation’s July 2010 report released

Board’s key recommendation adopted:
• A company incorporated offshore will be treated as an Australian tax
  resident if it has a ‘significant economic connection to Australia’.
• Test satisfied where both the company’s core commercial activities are
  undertaken in Australia and its central management and control is in
  Australia.

Treatment will reflect the corporate residency position prior to the 2016
High Court decision in Bywater Investments Ltd v FCT.

Effective from the first income year after date of Royal Assent, but
taxpayers will have the option of applying new law from 15 March 2017
(the date when ATO withdrew TR 2004/15).

Employee Choice Model

 Employee                             Employer
                      Joins

                YourSuper portal
      •   Run by ATO
      •   League table
      •   Data provided by APRA
      •   Use existing fund
      •   Employee selects new fund

Check out CA ANZ’s 2020 Budget page
                       Connect with me on LinkedIn
Learn more about CA ANZ’s Advocacy & Submissions
  Join myCA to connect, share, learn and collaborate
                 RU OK? Visit the CA Wellbeing site