Top 5 Tax Takeaways in the Federal Budget

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The 2021 Federal Budget had a whole mix of measures from aged care, child care, infrastructure, support for women, jobs and much much more. There were also some updates, extensions and introduction of tax breaks for key sectors of the economy.

The Federal budget, delivered on 11 May, was in deficit to the tune of $161 billion. Apart from the massive expenditure on areas such as aged care, child care and infrastructure, there was some familiar faces in the form of tax relief for individuals and businesses. Here is a summary of the key tax takeaways

1. Low & middle income tax offset extended

This tax measure was extended in the last budget due to COVID, and is being extended once more. To get the rebate you will need to complete your tax return. The amount you are refunded will vary based on your income.

  • $37,000 or less – you will receive $225
  • Between $37,001 to $48,000 – you will receive $255 plus 75c for every dollar over $37,000 to a maximum of $1,080.
  • Between $48,001 and $90,000 – you will receive $1,080
  • Between $90,001 and $126,000 – you will receive $1,080 minus 3 cents for every dollar over $90,000

2. Instant asset write-off extended 

The instant asset write off has been in place for a number of years and allows almost all businesses to claim the full cost of newly purchased assets assets (such as new equipment, machinery and vehicles) as a tax deduction in the year they were purchased. Usually the cost these assets must be claimed over many years.

This measure also carries with it the ‘loss carry back’ scheme allowing losses to be claimed against previous tax years when there was a tax liability. 

The intent of this measure is to bring forward investment by allowing businesses to gain the immediate tax benefit.

3. Patent box tax regime

A new entrant to the tax relief comes in the form of a ‘patent box’. This measure states that profits received from Australian medical and biotechnology patents will be taxed at 17% rather than the usual business tax rate of 25-30%. This is to encourage investment in medical research and manufacturing in Australia.

To further support medical start-ups, red tape surrounding employee share schemes will be lowered making this a more attractive way to recruit and retain staff.

4. Small brewers and distillers excise tax exemptions

Small brewers and distillers will be pleased to see exemptions on excise duties normally imposed on alcohol production. Previously only available to winemakers, eligible brewers and distillers will be able to receive a full remission of any excise they pay, up to $350,000.

This new measure only applies to small brewers and distillers.

5. Digital games tax offset

For businesses developing digital gaming software, a 30% tax offset may be available if the business invests more than $500,000 in certain types of games. The global gaming industry is valued at over $250 billion and the government wants to encourage more Australian businesses to get involved in this booming industry.

The ink is still drying on the latest federal budget and these measures are all still to pass through parliament with some initiatives (such as gaming) involving discussion with industry groups. But it pays to be aware and prepared to take action when it all becomes a reality.

Saige Accountants and Financial Planners help individuals and businesses with everything to do with their tax. If you have any questions or concerns about the tax measures in the federal budget, please talk to us.

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