Federal Budget 2020-21

Please click on the following link to view key announcements of the 2020-21 Federal Budget.

Federal Budget 2020-21

We would like to highlight the following articles in the 2020-21 Federal Budget:-

Outright deduction of capital assets until 30 June 2022 for most businesses  – Businesses with aggregated annual turnover of less than $5 billion will be able to deduct the full cost of all new eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 and first used or installed by 30 June 2022.

A full deduction will also apply to second-hand assets for small and medium sized businesses with aggregated annual turnover of less than $50 million. Under the current instant asset rules businesses with aggregated annual turnover between $50 million and $500 million can still claim an immediate deduction for the full cost of eligible second-hand assets costing less than $150,000 if they are purchased by 31 December 2020.

Also, under the new measures, small businesses with aggregated turnover of less than $10 million will be be able to deduct the balance of their simplified depreciation pool at the end of the income year.

Loss carry-back – Corporate tax entities with an aggregated turnover of less than $5 billion will be able to carry-back tax losses from the 2019-20, 2020-21 or 2021-22 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 and 2021–22 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.

Please note that these measures have passed both houses and are awaiting royal assent.

Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.