On 9 October 2020, Mr. Scott John Morrison, the Prime Minister of Australia has issued a release announcing the approval of the Budget 2020-21 measures. On 6 October 2020, the Budget measures were included as part of the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020, which was approved by the House of Representatives on 8 October and by the Senate on 9 October.
Lower taxes for hard-working Australians
In this Budget, the Australian Government is delivering an additional $17.8 billion in personal income tax relief to support the economic recovery, including an additional $12.5 billion over the next 12 months. It builds on the $8.1 billion in tax relief that will be delivered for the 2020‑21 income year under the already legislated Personal Income Tax Plan.
Under the Government’s changes, individuals will benefit from bringing forward the tax cuts in Stage 2 of its Plan, as well as a one-off additional benefit from the low- and middle-income tax offset in 2020-21.
Supporting business and investment
To support new investment and increase business cash flow, the Government is providing a temporary tax incentive, which will be available to around 3.5 million businesses (over 99 per cent of businesses) that employ around 11.5 million workers. The incentive will apply to around $200 billion worth of investment, including 80 per cent of investment in depreciable assets by non-mining businesses. From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
The Government will also allow companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid, to generate a refund. Loss carry-back will be available to around 1 million companies that employ up to 8.8 million workers. Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns.
A digital Australia
The COVID-19 pandemic has accelerated the adoption of digital technologies by Australian businesses and consumers which have enabled many to transform their operations and continue to trade through the crisis.
The Government’s Digital Business Plan will build on this momentum to support an even greater adoption of new technologies across the economy – by both businesses and consumers.
An additional $4.5 billion investment in NBN Co will bring ultra-fast broadband to millions of families and businesses. Funding of $29.2 million will also accelerate the rollout of the 5G network.
Supporting manufacturing and research and development
The Government’s $1.5 billion Modern Manufacturing Strategy is a long-term plan to support Australia’s economic recovery. The Government is investing an additional $2 billion through the Research and Development Tax Incentive.
