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13 May 2021

Budget 2021 - Businesses & Employers

Budget changes affecting businesses & employers

Small Business Instant Asset Write-off

The immediate write-off for eligible depreciable assets has been extended further in this year's budget. Businesses with an annual turnover of less than $5 billion can deduct the full cost of eligible depreciable assets of any value in the financial year in which they were purchased. 
 
The asset must be acquired from 7.30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
 
Whilst these write-offs can be very helpful to small business as a way of upgrading essential equipment, cash flow must also be taken into account. Ultimately, the deduction is not a refund of the amount of the item, it just reduces any profit the business makes & therefore, reduces any tax payable on the profit.  

In effect, the deduction is worth the tax rate applicable at the time, although it may well allow upgrades to computers, equipment, etc a little earlier than predicted.


Removal of the $450 minimum monthly threshold for Super Guarantee

The government has announced it will remove the current $450 minimum monthly wages threshold, under which employers do not have to pay Super Guarantee contributions for their staff. 
 
This will mean that eligible staff will accrue super on their wages from the first $1.

This measure will have effect from the start of the first financial year after the proposal is legislated by parliament.
 

Increase to the Super Guarantee from 1 July 2021

The government has previously legislated increases to the super guarantee rate, starting from 1 July 2021. 
 
The first increase in the new financial year will bump the super guarantee rate up from 9.5% to 10% of an employee's gross wages.

The super guarantee rate will then increase each financial year by 0.5% until it reaches 12% in the 2025-26 financial year, as set out below:
 

Year

 

Super Guarantee Amount

1 July 2020 – 30 June 2021

9.5%

1 July 2021 – 30 June 2022

10%

1 July 2022 – 30 June 2023

10.5%

1 July 2023 – 30 June 2024

11%

1 July 2024 – 30 June 2025

11.5%

1 July 2025 – 30 June 2026 and onwards

12%

 

Removal of the work test for voluntary super contributions

Currently individuals aged 67-74 years can only make voluntary concessional or non-concessional super contributions if they meet the work test - which specifies they must have worked at least 40 hours over a 30-day period in the relevant financial year. 

The government has announced it will remove this work test, subject to existing contribution caps.

This change will simplify the rules governing super contributions.  

 

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.   


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