Federal Budget 2021-22
We would like to highlight the following items in the 2021-22 Federal Budget:
Temporary full expensing extended – On 11 May 2021, the Australian Government announced that it will extend the temporary full expensing incentive in its current form for 12 months until 30 June 2023.
Currently, temporary full expensing allows businesses with aggregated annual turnover of less than $5 billion the ability to deduct the full cost of all new eligible capital assets acquired from 7:30pm AEDT on 6 October 2020. A full deduction also applies to second-hand assets for small and medium sized businesses with aggregated annual turnover of less than $50 million.
Please note that a car limit of $59,136 still applies for the cost of passenger vehicles designed to carry a load less than one tonne and fewer than 9 passengers.
Loss carry-back extended by one year – The Government has also extended the loss carry-back measure a further 12 months to allow corporate tax entities with an aggregated turnover of less than $5 billion the ability to carry-back tax losses from the 2019-20, 2020-21, 2021-22 or 2022-23 income years to offset previously taxed profits in 2018-19 or later income years.
The offset will be available on election by eligible businesses when they lodge their 2020–21, 2021–22 and now 2022-23 tax returns. The offset available will be limited by requiring that the amount carried back does not exceed the earlier taxed profits and will be also be limited to the balance of a company’s franking account to ensure a franking account deficit does not occur.
Superannuation contributions work test to be repealed – The superannuation contributions work test exemption will be repealed for voluntary non-concessional and salary sacrificed contributions for those aged 67 to 74 from 1 July 2022.
As a result, individuals under age 75 will be allowed to make or receive non-concessional (including under the bring-forward rule) or salary sacrifice contributions from 1 July 2022 without meeting the work test, subject to existing contribution caps. However, individuals aged 67 to 74 years will still have to meet the work test to make personal deductible contributions.
Please note that these measures are not yet law.
Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.