2020 Budget update

Last week the federal government delivered the much anticipated (and delayed) federal budget. Gone are the days of debt and deficit as the government begins to spend like we have never seen before to stimulate our economy and create jobs.  Is it enough?  Is it targeted to the right place?  Only time will tell.

The budget covered many areas, to many to cover here, I have summarised some of the more relevant changes to the Bayswater business community.

Employment

-Apprentices and Trainees: The existing wage subsidy has been extended and an additional $1.2b will be spent to employ an additional 100,000 apprentices or trainees.  This subsidies 50% of wages paid to a maximum of $7000 per quarter.

-JobMaker Hiring Credit: This is a $4b credit payable for up to 12 months for each new job created. It is paid at $200 per week for employees aged 16-29 and $100 per week for ages 30-35. To be eligible the employee must work at least 20 hours per week and the position must be a new position, not a replacement of an existing worker.

Tax

-Tax Cuts: The government has bought forward their previously announced income tax cuts.

The changes, expected to inject $12b into take-home pay include:

• Increasing the upper threshold for the 19% tax rate from $37,000 to $45,000
• Increasing the threshold for the 32.5% tax bracket from $90,000 to $120,000
• The Low-Income Tax Offset (LITO) is to increase from $445 to $700

A person on $40,000 per year is expected to receive a tax saving of $1060 compared to what they paid in the 17-18 financial year.  A person earning over $140,000 is expected to save $2,565.

-Small Business Tax concessions. Business with a turnover between $10b and $50b will have access to several tax concessions. Please contact us for more details.

-Offsetting tax losses: Business with a turnover of up to $5b will be able to offset losses against profits on which tax has been paid and generate a tax refund. Losses incurred in 2020-21 can be carried back against profits made in 2018-19 and 2019-20.

There are many other changes made in this budget, for a full summary please email me your request at ben@smarthappymoney.com.au

Cheers and have a great day.

Ben.

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