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08 Oct 2020 Treasury

Further extension of simplified working from home deductions

The Government has welcomed the further extension of the temporary arrangements put in place by the Australian Tax Office to make it easier for Australians to claim deductions for working from home due to COVID-19.

This further extension will allow taxpayers working from home to continue to claim a rate of 80 cents per hour by keeping a record of the number of hours they have worked from home, rather than needing to calculate specific running expenses, until 31 December 2020.

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Annual Ministerial Statement on Rural and Regional Budget Outcomes

The Government delivered Australia’s first Ministerial Statement on Rural and Regional Budget Outcomes to the Federal Parliament on Thursday 8 October. 

The Statement updates the House on the Coalition Government’s economic roadmap for rural and regional communities. It is the Government’s intention to deliver this update annually.

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Expanding access to small business tax concessions to support jobs

For the first time, businesses with an aggregated annual turnover between $10 million and $50 million will have access to up to ten small business tax concessions. 

The expanded concessions, as part of the 2020-21 Budget will apply in three phases:

  • From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
  • From 1 April 2021, eligible businesses will be exempt from the 47 per cent fringe benefits tax on car parking and multiple work-related portable electronic devices provided to employees.
  • From 1 July 2021, eligible businesses will be able to access the simplified trading stock rules, remit pay as you go instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods.

In addition, from July 1, eligible businesses will have a two-year amendment period apply to income tax assessments for income years. 

Plus, the Commissioner of Taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50 million aggregated annual turnover threshold.

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Boost for skills training with fringe benefits tax exemption

The Government will provide an exemption from fringe benefits tax for employer-provided retraining and reskilling, for employees who are redeployed to a different role in the business. The exemption will apply from 2 October 2020. 

The exemption will not extend to retraining acquired by way of a salary packaging arrangement or training provided through Commonwealth supported places at universities, which already receive a benefit.

In addition, the Government will consult on potential changes to the current arrangements for workers that undertake training at their own expense. 

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Removing capital gains tax for granny flats

The Government is providing a targeted capital gains tax (CGT) exemption for granny flat arrangements where there is a formal written agreement in place.

Under the measure, CGT will not apply to the creation, variation or termination of a formal written granny flat arrangement providing accommodation for older Australians or people with disabilities. 

The measure will commence as early as 1 July 2021 subject to the passing of legislation.

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Economic Recovery Plan for Australia

The 2020-21 Budget has committed $25 billion in direct COVID-19 response measures and $74 billion in new measures to create jobs.

Under this Economic Recovery Plan, the economy is forecast to grow by 4¼ per cent next calendar year and unemployment is expected to fall to 6½ per cent by the June quarter 2022.

The plan includes: 

  • Allocating $4 billion to JobMaker Hiring Credits which will see funds available to employers who hire eligible employees aged 16-35.
  • Investing $1 billion in a JobTrainer Fund which will create up to 340,000 free or low-cost training places for school leavers and job seekers.
  • Providing an additional $17.8 billion in personal income tax relief for more than 11 million Australians, including an additional $12.5 billion over the next 12 months.
  • Spending $14 billion in new and accelerated infrastructure projects support a further 40,000 jobs.
  • Adding $1.5 billion to the Modern Manufacturing Strategy which will ensure an internationally competitive and resilient manufacturing sector, and create more high-value jobs.

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Rebuilding the economy and securing Australia’s future

The Government’s Economic Recovery Plan sets out the path to rebuild the economy, stabilise debt, and then reduce it over time.

The first phase of this plan intends to continue to deal with the impact of COVID-19. 

COVID-19 will see our deficit reach $213.7 billion this year, falling to $66.9 billion by 2023-24.

GDP is forecast to fall by 3¾ per cent this calendar year and the unemployment rate is forecast to peak at 8 per cent in the December quarter.

Next calendar year, GDP is forecast to grow by 4¼ per cent, and the unemployment rate is forecast to fall to 6½ per cent in the June quarter 2022.

The first phase of the recovery plan will therefore focus on creating jobs and rebuilding the economy. 

Once recovery has taken hold and the unemployment rate is on a clear path back to pre-crisis levels, comfortably below 6 per cent, the Government says it will move to the second phase of its plan. 

This will see a deliberate shift from providing temporary and targeted support to stabilising gross and net debt as a share of the economy.

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Superannuation reforms: The Your Future, Your Super package

The Government is reforming the superannuation system with a Your Future, Your Super package. 

Once implemented, the package will benefit Australians by $17.9 billion over the next 10 years.

Commencing 1 July 2021, the package will improve the superannuation system by:

  • Preventing the creation of unintended multiple superannuation accounts when employees change jobs.
  • Providing access to a new interactive online YourSuper comparison tool which will encourage funds to compete harder for members’ savings.
  • To protect members from poor outcomes and encourage funds to lower costs the Government will require superannuation products to meet an annual objective performance test. Those that fail will be required to inform members. Persistently underperforming products will be prevented from taking on new members.
  • The Government will increase trustee accountability by strengthening their obligations to ensure trustees only act in the best financial interests of members. 
  • Superannuation funds will also be required to provide better information regarding how they manage and spend members’ money in advance of Annual Members’ Meetings.

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Tax relief as part of Economic Recovery Plan

The Government will deliver significant tax relief as part of its Economic Recovery Plan. 

As part of the 2020-21 Budget, the Government will bring forward Stage 2 of the Personal Income Tax Plan by two years.

From 1 July 2020:

  • Low income tax offset will increase from $445 to $700.
  • The top threshold of the 19 per cent tax bracket will increase from $37,000 to $45,000. 
  • The top threshold of the 32.5 per cent tax bracket will increase from $90,000 to $120,000.

The Government will also provide additional targeted support to low- and middle-income Australians. In 2020-21, low-and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset. 

In addition, the Government will now allow 99 per cent of businesses to write off the full value of assets they purchase.

Businesses with a turnover of less than $5 billion will be able to immediately deduct the full cost of eligible depreciable assets acquired from 7:30pm (AEDT) on 6 October 2020 and first used or installed by 30 June 2022.

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Guaranteeing essential services

The Government will continue to guarantee the essential services Australians rely on as part of the Economic Recovery Plan for Australia.

This includes record funding for: 

  • Health with total spending of $93.8 billion in 2020-21, an increase of almost 43 per cent since 2014-15.
  • Aged care with $1.6 billion provided for an additional 23,000 home care packages across all package levels.
  • Pensioners with two additional $250 Economic Support payments, the first to be provided from December 2020 and the second from early 2021.
  • Disability with a further $3.9 billion to the National Disability Insurance Scheme. 
  • Education with an increase in annual funding to $21.8 billion in 2020, with a commitment of $310 billion in total recurrent funding from 2020 to 2030.
  • Veterans with $94.3 million directed toward improving mental health outcomes and ensure high-quality care for older veterans and their families.
  • Communities with $220 million to support the delivery of critical front line services for families.

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