A key focus of the budget unveiled by treasurer Josh Frydenberg on Tuesday night was to put more money in people’s pockets to encourage spending as Australia continues its recovery from the COVID-19 pandemic.
Not sure how this affects you personally? One of our Business Advisors summarises what the announcements mean for you and your family.
Extended Personal Tax Relief
The Low and Middle-Income Tax Offset (LMITO), worth up to $1,080 for individuals earning between $37,000 and $120,000, has been extended for 12 months to cover the 2021/22 financial year. This will be received once individuals lodge their tax return for the 2021/22 financial year.
Extended Availability of New Home Guarantee
From 1 July 2021, a further 10,000 places will be made available for home first buyers seeking to build a new home or purchase a newly built home with a deposit of as little as 5%.
Family Home Guarantee for Single Parents
The government has introduced the Family Home Guarantee to assist single parents with dependents in securing their own home. From 1 July 2021, 10,000 guarantees will be made available over four years to eligible single parents with a deposit of as little as 2%, subject to an individual’s ability to service a loan. Applicants must be Australian citizens over 18 years of age with an annual taxable income of less than $125,000.
Increased Childcare Subsidies
From 1 July 2022, the Government will be increasing the childcare subsidies available to families with multiple children aged 5 and under in childcare by adding up to an additional 30 percentage point subsidy for every second and third child. The Government will also be removing the $10,560 cap on the Child Care Subsidy for families with combined incomes of more than $189,390.
Change of Taxing Point for Employee Share Schemes
The Government is supporting Australian companies to attract and retain talent by removing the current taxing point which occurs on the cessation of employment for tax-deferred Employee Share Schemes (ESS). This will make it easier for businesses to offer equity incentives to startup employees.
Simplified Individual Tax Residency Rules
A new framework is set to be put in place to provide more certainty around the individual tax residency rules. The primary test will be a simple assessment of whether a person has been physically present in Australia for 183 days or more in any income year. If this is not met, taxpayers will be subject to secondary tests which will depend on a combination of physical presence and measurable, objective criteria.
Greater Tax Deductibility of Self-Education Expenses
The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education. Currently, only the excess of expenses over $250 is deductible. This measure is set to take effect in the first income year after the date of assent to the enabling legislation, although it is expected to have a negligible impact on receipts over the forward estimates period.
For further details on the latest budget announcements, click here.
For more information or if you have any questions about your personal situation, contact our office on (08) 8172 1444 or email our friendly team today!