In terms of preserving the roots of Australia’s economy, the major economic stimulus programs of Cashflow boost, JobKeeper and JobSeeker have already expired for many taxpayers or they are to run out by Easter 2021.
The instant asset write-off scheme, expanded at the beginning of the COVID-19 emergency and then again as part of the recent 2021 Federal Budget to depreciable assets with no limit on the amount spent, will now cease on 30 June 2022.
The Federal government is now pinning its hopes on this along with tax cuts for individuals and companies and the new JobMaker program, announced in the recent 2021 Budget, to get us through to the spring and summer of next year.
TAX CUTS – INDIVIDUALS
Employers must make sure they are withholding the correct amount from salary or wages paid to employees for any pay runs processed in their system from no later than 16 November onwards.
Employees will notice the tax cuts in their take home pay already. For others it may be longer. You can let your employer know whether or not to make adjustments in tax withheld backdated to 1 July.
If you don’t, any over-withholding that occurred prior to the updates to payroll software or processes will be applied as refunds when you lodge your 2021 income tax return. Payroll software packages Xero, Myob and Quickbooks have already made changes and if using this software for payroll processing will already automatically have the changes made.
TAX CUTS – COMPANIES
The table below illustrates the fall in the company tax rate for base rate entities, defined as a trading entity with turnover of $50 million or less, to 26% in this financial year and 25% in 2021/22:
|Progressive changes to the company tax rate
|Aggregated turnover threshold
|Tax rate for base rate entities under the threshold
|Tax rate for all other companies
|2018–19 to 2019–20
To be legislated, however eligible employers will have access to a JobMaker Hiring Credit for each new job they create over the 12 months from 7 October 2020, for which they hire an eligible employee, for a maximum claim period of 12 months from their employment start date.
Employers must register with the ATO and make claims quarterly, with claims commencing in February 2021.
The JobMaker Hiring Credit will be:
- $200 per week for each eligible employee aged 16 to 29
- $100 per week for each eligible employee aged 30 to 35.
An employer cannot claim JobKeeper and JobMaker Hiring Credit at the same time.
To be eligible, employers must:
- hold an Australian Business number (ABN)
- be up-to-date with their tax lodgement obligations
- be registered for Pay As You Go (PAYG) withholding
- be reporting through Single touch payroll (STP).
Eligible employees must have worked an average of at least 20 hours per week over the quarter for the employer to qualify for the payment. Employees that start and/or stop employment during a quarter must meet a similar test based on the length of time in employment.
For the employer to be eligible, new employees must be in receipt of income support payments, such as JobSeeker or Youth Allowance, for at least one of the three months before they were hired.
Further eligibility conditions will apply to employers based on the employer’s headcount and payroll on 30 September 2020.