1300 GRIMA TAX (1300 474 628) emma@grimaaccounting.com.au

2021 Federal Budget

May, 2021

what does the 2021 federal budget

mean for you and your business

Instant Asset Write Off for all Business under the $5 Billiion Turnover

Extended for another year until 30th June 2023

This is a tax deduction and will reduce your taxable income only.

Any balance of pools for small business can also be written off up to 30th June 2023.

What this means? If you are a builder and need to invest in new equipment valued at $50,000 and you trade via a Company, this can save you $13,750 in Tax.

An immediate full deduction for the cost of these assets will reduce your 2021 tax. If you purchase enough assets to create a tax loss this year, combining this with the Loss Carry Back could give you significant tax refunds of tax paid in prior years (Company Only)

COMPANY TAx rate to reduce 25%

base rate companies

From 1 July 2021, the company tax rate for “base rate” companies will reduce from 26% to 25%.

It may be possible to defer some income from this 2021 tax year to the 2022 tax year to reduce your company tax.

COMPANY LOSS CARRY BACK EXTENDED TO 2023

Current year losses can be offset against prior year profits of Companies.

This could result in significant tax refunds for you.

If you have a Company, as part of 2021 Tax Planning you need to consider your tax position from 1 July 2019 and forecasts of your tax position until 30 June 2023.

Available by election upon lodging your company tax return for 2021 and 2022.

STAGE 3 INDIVIDUAL TAX CUTS REMAIN UNCHANGED

From 1 July 2024 onwards, individual income up to $200,000 will be taxed at a maximum of 30%.

This may help you manage your Div7A loans better.

If you have a company with Div7a Loans, careful planning of your Div7A loan repayments could significantly improve your tax position. We need to review this as part of your 2021 Tax Planning

individuals

$250 self education expenses reduction removed

Improved opportunity for first home ownership.

Currently, individuals claiming a tax deduction for self-education expenses need to reduce their claim by the first $250. This reduction has now been removed. This is expected to apply from 1 July 2022 onwards.

Less tax to pay, and maybe a larger tax refund for individuals.

2% Deposit Home Loans for Single parents

From 1 July 2001, the Government will guarantee 10,000 single parents with dependents to enable them to have a home loan with a deposit as low as 2%. It applies to both first home buyers and previous owner-occupiers. You must be an Australian citizen with a taxable income of no more than $125,000.

Improved opportunity for home ownership for single parents.

5% Deposit Home Loans for first home buyers building new homes

This scheme will be extended by another 10,000 places from 1 July 2021 to 30 June 2022. Eligible first home buyers can build a new home with a deposit as low as 5%.

Improved opportunity for first home ownership.

FIRST Home SAVER SCHEME CAP INCREASES

This scheme will be extended by another 10,000 places from 1 July 2021 to 30 June 2022. Eligible first home buyers can build a new home with a deposit as low as 5%.

*Note, the above is provided as general advice only and is subject to Royal Assent. Please contact our office shall you require specific advice in your situation.

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We are always happy to help small business & fellow community members.