2021 Federal Budget summary

Who would have thought that in 2020 toilet paper became just as sought after as truffles! The world baked banana bread in unison, parents became instant teachers and some of us became hairdressers. A trip to the garden centre became a “day out”, working from home in tracksuits became the new norm and designer face masks were born! 

Even the 2020-21 Federal Budget was pushed out until October and it was all about jobs - spend money now to get business hiring and worry about the cost later...This one has been coined as the “pandemic budget” and will contain measures to boost job skills, infrastructure, tax, energy, digital technology and deregulation. Treasurer Josh Frydenberg said…“The Budget will lay out the next phase of Australia’s economic recovery plan, to grow our economy so we can deliver the jobs and guarantee the essential services Australians rely on and keep Australians safe”. Let’s hope so.

This year, the budget has continued its growth agenda to further support businesses, boost investment and create jobs.

Here’s a re-cap of what was announced…

1. $1.9 billion vaccine rollout

The government is investing an additional $1.9 billion in the vaccination program including funding to distribute and administer vaccines, record and monitor progress, communicate key public messages and support states and territories in the roll‑out

2. $17.7 billion to improve aged care

The government is allocating additional funding of $17.7 billion for a comprehensive aged care reform package in response to the Royal Commission into Aged Care Quality and Safety. This will include another 80,000 new home care packages, increased time nurses and carers spend with residents, support more than 33,000 new training places for personal carers, a new indigenous workforce and additional $10 per resident per day payment to enhance the viability and sustainability of the residential aged care sector.

3. Patent box with 17% tax rate for new patents

A patent box is being introduced to encourage businesses to undertake their R&D in Australia and keep patents here. The patent box will tax income derived from Australian medical and biotech patents at a 17% effective concessional corporate tax rate.

4. Cessation of employment removed as tax point for Employee Share Schemes

To support Australian companies to attract and retain talent, the government is removing the cessation of employment taxing point for tax-deferred Employee Share Schemes (ESS) that are available for all companies.

5. Full expensing and loss carry back extended to 2023

Temporary full expensing and temporary loss carry-back are being extended for a further year to June 2023.

6. 5,000 additional higher education short courses

7. Low- and middle-income tax offset extended to 2022

The low- and middle-income tax offset (LMITO) is extended for a further year to June 2022. Around 10.2 million individuals are expected to benefit from retaining the offset, worth up to $1,080 for individuals or $2,160 for dual income couples.

8. New bright-line test for individual tax residency

The government will replace the individual tax residency rules with a new, easier to understand framework that provides certainty and reduces compliance costs for globally mobile individuals and their employers. The primary test will be a simple ‘bright line’ test: a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.

9. $450 per month minimum removed for superannuation guarantee

The government is removing the $450 per month Ordinary Time Earnings threshold for the superannuation guarantee.

10. Women’s budget

As expected, the Budget also included new measures to improve women’s safety, economic security, health and wellbeing with a $3.4 billion package. This includes $1.1 billion in funding for women’s safety; $1.9 billion to support women’s economic security including $1.7 billion to improve the affordability of childcare for Australian families and $351.6 million in women’s health and wellbeing measures

Source: Chartered Accountants ANZ - Australian Federal Budget 2021 22 - Highlights and key measures