2021/22 Federal Budget Highlights

The Federal Treasurer, Mr Josh Frydenberg, handed down the 2021/22 Federal Budget at 7:30 pm (AEST) on 11 May 2021.

The major tax and superannuation highlights are set out below.

Individuals

•The low and middle income tax offset, available to taxpayers earning less than $126,000 per year, will remain for the 2021–22 income year. Low and middle income tax earners will receive up to $1,080 for individuals or $2,160 for couples.

Companies and business

• Temporary full expensing of eligible assets will be extended by 12 months to 30 June 2023.

- Eligible businesses with aggregated turnover or income less than $5 billion will be able to deduct the full cost of eligible depreciating assets acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.

• The temporary loss carry back offset will be extended by one year to apply for 2022–23 income year losses.

- Eligible corporate tax entities with aggregated turnover less than $5 billion will be able to carry back losses from the 2022–23 income year to offset previously taxed profits made in or after the 2018–19 income year.

• The employer exemption from superannuation guarantee payments for individuals earning less than $450 in salary or wages in a calendar month will be removed.

- The measure will take effect from the 1 July following legislation receiving assent. The government expects to have removed this exemption category before 1 July 2022.

Superannuation

• From 1 July 2022, individuals aged 67 to 74 will no longer be required to meet the work test when making or receiving non-concessional superannuation contributions or salary sacrificed contributions.

- These individuals will also be able to access the non-concessional bring-forward arrangement, subject to meeting the relevant eligibility criteria.

- Access to concessional personal deductible contributions for individuals aged 67 to 74 will still be subject to meeting the work test.

• From 1 July 2022, the eligibility age to make downsizer contributions into superannuation will be reduced from 65 to 60 years of age.

- The downsizer contribution will allow individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000 per person (or $600,000 per couple) from the proceeds of selling their home, provided that the home has been held for at least 10 years. Both members of a couple can contribute in respect of the same home, and contributions do not count towards non-concessional contribution caps. If you have any queries in regard to this please do not hesitate to our office.

Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.