2020 Federal Budget

On 6 October 2020 the Federal Government, as part of the 2020 Federal Budget, announced a range of measures that will benefit Businesses (receiving Royal Assent on 14 October 2020), including:-

Temporary Expansion of the Immediate Asset Write-off;
Temporary Loss Carry-back Provisions for Eligible Companies;
Changes to the R&D Rates and Thresholds;
Expanding Access to a number of the Small Business Tax Concessions; and
Introduction of the JobMaker Hiring Credits.

LAST UPDATED 06 Novermber 2020

Temporary Expansion of the Immediate Asset Write-off

From 7:30 PM AEDT on 6 October 2020, Businesses with an Aggregated Turnover of less than $5 billion will be able to deduct the full cost of eligible capital assets acquired and first used or installed by 30 June 2022, as well as extending the current instant asset write-off by giving businesses 6 more months (until 30 June 2021) to first use and install the relevant assets.

	Aggregated Turnover	Measures
New	less than $5 billion	immediate tax deduction for the full cost of new eligible capital assets (depreciable assets) and improvements to existing eligible assets, acquired after 6 October 2020 and first used or installed by 30 June 2022
New	less than $50 million	immediate tax deduction for the full cost of second-hand assets (depreciable assets), acquired after 6 October 2020 and first used or installed by 30 June 2022
Existing	less than $500 million	immediate tax deduction for the full cost of depreciable assets costing less than $150,000 (acquired between 12 March 2020 and 31 December 2020, and first used or installed by 30 June 2021)
New	less than $10 million	can deduct the balance of their simplified depreciation pool at the end of the income year (while the above provisions apply)

Temporary Loss Carry-back Provisions for Eligible Companies

Companies with an Aggregated Turnover of less than $5 Billion, will be able to apply Tax Losses made in the 2019/20 to 2021/22 Income Years against taxed Profits in the 2018/19 and later Income Years.

Any Tax Refund as a result of the Loss Carry-back is limited as follows:-

The Losses Carried-back cannot exceed earlier taxed Profits; and
The Loss Carry-back cannot generate a Franking Account deficit.

The tax refund will be available on election by Eligible Businesses when they lodge their 2020/21 and 2021/22 Income Tax Returns.

Changes to the R&D Rates and Thresholds

The changes to the R&D Rates and Thresholds are to take effect from 1 July 2020 and are as follows:-

Increasing the R&D Expenditure Threshold (the level where the R&D Tax Offset is reduced to the Corporate Tax Rate for expenditure in excess of the threshold) from $100 million to $150 million while also making the threshold a permanent feature of the R&D Provision;
Linking the R&D Tax Offset to the Taxpayer’s Corporate Tax Rate:-
- the Refundable Tax Offset (Aggregated Turnover less than $20 million): Corporate Tax Rate plus 18.5%;
- the Non-Refundable Tax Offset (Aggregated Turnover of $20 million or more): Corporate Tax Rate plus 8.5% unless the Taxpayer’s R&D Intensity (the percentage of total expenditure on R&D Activities) is above 2%, where the Tax Offset is the Corporate Tax Rate plus 16.5%
The previously proposed $4 million cap on R&D Tax Offset Refunds will no longer apply.

Expanding Access to a number of the Small Business Tax Concessions

Business with an Aggregated Turnover of less than $50 million, will now be able to access certain Tax Concessions that were previously available only to Small Business Entities (Aggregated Turnover of less than $10 million):-

From 1 July 2020 eligible Businesses will now be able to immediately deduct certain start-up expenses and certain prepaid expenditure;
From 1 April 2021 eligible Businesses will now be exempt from Fringe Benefits Tax on Car Parking and multiple work-related portable electronic devices (ie. phones, laptops etc.) provided to employees; and
From 1 July 2021 eligible Businesses will now be able to access the following measures:-
- Simplified trading stock rules;
- Remit PAYG instalments based on GDP adjusted notional tax;
- Settle Excise Duty and Excise-equivalent Customs Duty monthly on eligible goods;
- The time limit to amend Income Tax Assessments reduced from four (4) years to two (2) years; and
- Obtain a Simplified Accounting Method determination for GST Purposes from the Commissioner.

Introduction of the JobMaker Hiring Credits

The Federal Government introduced the JobMaker Hiring Credits, which will be available to Businesses for Eligible Employers over 12 months from 7 October 2020 for each additional job they create for an Eligible Employee.

The JobMaker Hiring Credits operate as follows:-

Eligible Employers need to demonstrate that the Employee increases the overall headcount (compared to 30 September 2020) and payroll (compared to the quarter ended 30 September 2020);
To be eligible the Employees will need to:-
- have worked a minimum of 20 hours per week (averaged over a quarter);
- have received the JobSeeker Payment, Youth Allowance (other) or Parenting Payment for at least one (1) month out of the three (3) months prior to being hired; and
- have been hired by 6 October 2021.
The JobMaker Hiring Credit is $200 per Employee per week (if the Business hires an Eligible Employee aged 16 to 29 years), or $100 per Employee per week (if the Business hires an Eligible Employee aged 30 to 35 years);
The JobMaker Hiring Credit is available for a period of up to 12 months from the date of employment and is capped at $10,400 per additional Employee;
The JobMaker Hiring Credits will be claimed quarterly in arrears from 21 February 2021 and will required quarterly declarations to be lodged with the ATO confirming eligibility.