2021-22 Federal Budget: Key Take-aways for Business

Michael Harvey, CPA-certified Accountant shares his main points of interest out of The 2021-22 Federal Budget; the key wins and losses for small to medium businesses. Here are the key takeaways you should take note of:

Business tax:

• Temporary full expensing measures to be extended by 12 months until 30 June 2023.

• Loss carry-back offset to be extended by 12 months, allowing corporate entities to carry back tax losses for the 2022-23 income year for up to four income years, as far back as the 2018-19 income year.

• Removal of minimum income threshold for superannuation guarantee, effective from 1 July 2022.

12-month extension of temporary full expensing

The temporary full expensing measures introduced in the 2020-21 budget provided a deduction for the full cost of eligible depreciating assets first used or installed ready for use before 30 June 2022 to entities with aggregated turnover of less than $5 billion. The measure will now be extended until 30 June 2023 providing additional time for eligible entities to make capital investments and benefit from accelerated tax depreciation.

All other features of the measure should remain unchanged including the alternative test for entities that have aggregated turnover of $5 billion or more, the ability to opt-out on an asset-by-asset basis, availability of full expensing on capital improvements to existing depreciating assets and the ability to write off the entire balance of a general small business pool for small business entities using simplified depreciation.

12-month extension of loss carry-back

The loss carry-back offset introduced in the 2020-21 budget will also be extended by a further 12 months, allowing corporate entities to carry back tax losses for the 2022-23 income year for up to four income years, as far back as the 2018-19 income year.

Removal of minimum income threshold for superannuation guarantee

Currently, employers are not required to make superannuation contributions under the superannuation guarantee legislation for employees in receipt of salary and wages of less than $450 in any calendar month. Many employers have configured their payroll systems to accommodate this threshold.

The Government has announced that this threshold is to be removed with effect, most likely from 1 July 2022. This measure will mean that superannuation support must be provided to all employees regardless of the level of income in any one month and is designed to ensure low income earners are not disadvantaged. The proposed changes will primarily impact employers with casual and part-time employees such as those in the retail and hospitality industries.

Want to know more about how your business is affected? There are sure to be more details to come as relevant government bodies implement the new funding, but as always reach out to our business support team if you have any questions.