- The minimum monthly income threshold of $450 before super guarantee contributions are payable by employers is proposed to be abolished, to more fairly treat low-income workers, of which 2/3rds are women.
- The work test to make non-concessional contributions by those aged 67 to 74 is proposed to be abolished. However, some sort of work test will be applicable for personal concessional contributions for those over age 67.
- The age for making downsizer contributions (up to $300,000 each per member of a couple) will be reduced to age 60. The advantage of downsizer contributions is that they are not counted under the non-concessional contributions cap.
- Self-managed super funds (SMSFs) and small APRA funds (SAFs) with old complying pensions (including Term Allocated Pensions) will be able to exit these legacy style products. The annual costs, including taxation and auditing to a SMSF can be quite costly for older funds in particular, where the fund is “stuck” with a Term Allocated Pension until the term expires.
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The Government will provide an additional 80,000 new aged care packages and overall improvement in funding.
Immediate asset write-offs (“full expensing”)-
Businesses with an aggregated turnover of less than $5 billion will be able to continue to fully expense the cost of new depreciable assets and the cost of improvements to existing eligible assets in the first year of use.
Introduced in the 2020-21 Budget, this measure will enable an asset’s cost to continue to be fully deductible upfront rather than being claimed over the asset’s life, regardless of the cost of the asset. The extension means that the rules can apply to assets that are first used or installed ready for use by 30 June 2023.
Carry back of tax losses
– Applicable for companies with annual aggregated turnover of up to $5 billion
– Applies for tax losses arising in tax years ending 30 June 2020, 2021, 2022 and now extended to 2023
– Can be applied against taxable income for years ending 30 June 2019 and later
– Commences from lodgement of income tax return for this current tax year
Under this measure tax losses can be applied against taxed profits in a previous year, generating a refundable tax offset in the year in which the loss is made. The amount carried back can be no more than the earlier taxed profits, limiting the refund by the company’s tax liabilities in the profit years.
It is also important to take note of Super issues NOT addressed in the Budget which are set to be implemented from 1 July 2021:
- Employer Super guarantee payments will increase to 10% from 1 July 2021.
- With financial markets bouncing back over the last year, the Account-Based Pension minimums will return to the normal 100% level from 1 July 2021.
- Preservation age will increase to age 59
- Concessional contributions cap increases to $27,500 per annum
- Non-Concessional contributions cap increases to $110,000 per annum ($330,000 under the bring forward provision)