COVID-19 has caused many disruptions for Australian businesses and households alike. Many were forced to change the way they operate and cut costs to stay afloat, and many employees were laid off in the process. Accordingly, the government has announced several changes to assist us in these hard times.

Here are some of the main new developments that you may need to consider when planning for the 2021 financial year end:

  1. For individuals:

Individuals were given special access to an additional $10,000 of non-assessable income from their superannuation fund. They have also been allowed a certain simplified “shortcut method” to claim deductions on their work from home expenses. The shortcut method was brought into action on the first of March 2020, but can be applied on any expenses incurred up to the 30th of June 2021, with the potential to be extended.

This method allows you to claim 80 cents for every hour you worked from home. There are two other methods that you can use to claim deductions for your work-from-home expenses. Contact our agents for more details.

Additionally, the upper limits of certain brackets have also been raised for this financial year, with the 19% bracket increasing to a $45,000 top, and the 32.5% bracket to a $120,000 topside.

Finally, as off 2022, the general transfer balance cap on superannuation funds will be increased from $1.6 million to $1.7 million. This increase will bring with it an increase to the contribution caps allowed, with the non-concessional cap increasing to $110,000 and the concessional increasing to $27,500.For businesses and employers

2. Company tax rates

In 2020, the government reduced the tax rates for companies with aggregated turnover less than $50 million – if 80% or less of the income is from passive sources, to 27.5%. This year, they have further reduced this to 26%.

  • Instant asset write-off

Businesses with an aggregated turnover that is less than $5 billion may qualify for 100% instant asset write-off if they purchase a new asset and have it installed and ready for use after 6 October 2020. The asset may be second-hand if the business’s turnover is less than %50 million.

Additionally, any costs generated to improve an existing depreciating asset in a business with less than $5 billion turnover between 6 October 2020 and 30 June 2021 can be claimed as full deductions.

Businesses with a turnover that is less than $10 million may apply full expensing of depreciating assets (FEDA) if they use simplified depreciation rules.

  • Start-up tax deductions

Previously only available for small businesses with a turnover less than $10 million, in 2021, medium-sized businesses with a turnover of $10-50 million may be able to claim deductions for start-up expenses, such as legal or accounting services needed to set up a new business, as well as any prepaid expenditures on certain services for up to 12 months.

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In 2022, medium businesses will also qualify for:

  • Simplified trading stock rules
  • Quarterly calculations of PAYG instalments
  • Simplified accounting for GST
  • A potential 2 year period to amend income tax returns
  • Other
  • Loss carry-back

For the first time, when companies lodge their 2021 returns, they can claim the new loss carry-back measures. This means that companies with an aggregated turnover that is less than $5 billion can choose to carry back their 2020 or 2021 tax losses to offset them against the tax liability of 2019 and 2020, where applicable.

Alternatively, the loss carry-back measure can be carried forward to offset future profits provided certain guidelines are met.

  • JobMaker Hiring Credit

The JobMaker scheme is a method to incentivise businesses to employ young job seekers aged 16 to 35. Employers must register for this scheme, with registration having started in December 2020, and any new hires need to be made between 6 October 2020 and 6 October 2021.

Registered employers who fit the criteria may claim $200 per week for each employee between the age of 16 and 29 hired, and $100 per week for employees aged 30 to 35.

If we’ve learned anything in the past couple of years it’s that we, as a nation, are resilient. We must now learn to develop business strategies that match our resilience. We must build strategies that make it easier for our businesses to navigate and recover from crises. This is achieved through fortifying financial positions and planning suitable tax strategies. Call us now to discuss a strategy that best benefits you and your business, or find more tax minimisation strategies in our free EOFY guide.

Disclaimer: Information included in this post is of general nature, it has been prepared without taking into account your specific situation. It is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. You should not make any decision, financial or otherwise, based on any of the information presented here without undertaking independent due diligence and consultation with a professional accountant or financial adviser.