Federal Budget 2020-21 Summary
We all understand that budgets are an exercise in predicting the future. Given what has happened in 2020, gazing into the crystal ball and extracting something reliable is fraught with difficulty.
The Treasury has given its best estimate, but we also need to appreciate that budgets are usually never 100% on target — that’s the nature of budgets. The question is, by how much? It will be remembered as Australia’s biggest spending budget with a forecast deficit of $214 billion for the 2021 fiscal year.
The big news for business is the temporary full expensing of capital assets. From now until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed.
As expected, the adjustments to tax rates that were originally due for implementation in the year ending 30 June 2023 have been brought forward to apply from 1 July 2020.
| Individual tax rates for residents | ||
| 2020-21 ~ 2023-24 tax thresholds | ||
| Taxable income | Rate (%) | Tax on this income |
| $0 – $18,200 | 0 | Nil |
| $18,201 – $45,000 | 19 | 19c for each $1 over $18,200 |
| $45,001 – $120,000 | 32.5 | $5,092 plus 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | 37 | $29,467 plus 37c for each $1 over $120,000 |
| $180,001 + | 45 | $51,667 plus 45c for each $1 over $180,000 |
| 2024-25 ~ later tax thresholds | ||
| Taxable income | Rate (%) | Tax on this income |
| $0 – $18,200 | 0 | Nil |
| $18,201 – $45,000 | 19 | 19c for each $1 over $18,200 |
| $45,001 – $200,000 | 30 | $5,092 plus 30c for each $1 over $45,000 |
| $200,001 + | 45 | $51,592 plus 45c for each $1 over $200,000 |
| Individual tax rates for non-residents | ||
| 2020-21 ~ 2023-24 tax thresholds | ||
| Taxable income | Rate (%) | Tax on this income |
| $0 – $120,000 | 32.5 | 32.5c for each $1 |
| $120,001 – $180,000 | 37 | $39,000 plus 37c for each $1 over $120,000 |
| $180,001 + | 45 | $61,200 plus 45c for each $1 over $180,000 |
| 2024-25 ~ later tax thresholds | ||
| Taxable income | Rate (%) | Tax on this income |
| $0 – $200,000 | 32.5 | 32.5c for each $1 |
| $200,001 + | 45 | $65,000 plus 45c for each $1 over $200,000 |
The third stage of the tax cuts which are to apply from 1 July 2024 will still apply from that date. Additionally:
- The Low and Middle Income Tax Offset (LMITO) will be retained for the 2020-21 income year.
- The Low Income Tax Offset (LITO) will increase from $445 to $700. The increased LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000. The LITO will then be withdrawn at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.
For further information about the 2020-21 Federal Budget, email us at administration@ventureprivateadvisory.com.au
You might also want to read this Federal Budget 2021-22: BUSINESS.