The 2021-2022 was recently released by the Federal Government. It is focused on securing Australia's recovery post COVID-19. The budget aims to create jobs (therefore bringing the unemployment rate down), guaranteeing essential services and building a more resilient and secure Australia. It aims to do this with:
Personal income tax cuts (for low to middle income earners, worth $1,080 for individuals or $2,160 for dual income couples);
Business tax incentives;
New apprenticeships and training places;
Improving women's safety and economic security
More infrastructure; and
Record funding for schools, hospitals, aged care, mental health and NDIS.
The highlights which we will be focusing on include incentives which affect:
Australian Women; and
Startups and small and medium sized businesses
Australian Women
The Government is supporting the economic security of women by investing in affordable child care. The steps they will take include: increasing the subsidy for the second and subsequent child; and removing the annual cap from 1st July 2022.
The Government is aiming to improve retirement incomes for women by removing the $450 per month superannuation threshold before employers are required to pay superannuation guarantee (which will expand the superannuation guarantee, improving coverage and increasing retirement savings).
Employees who earn less than $450 per month (the majority of whom are women) will now be paid the superannuation guarantee. The Government is currently planning to introduce the legislation to make this change by 1st July 2022, with the changes taking effect from the start of the first financial year following the legislation passing in Parliament.
The Government is also providing a pathway to home ownership by establishing the Family Home Guarantee to support single parents with dependents (who are predominantly women) to enter (or re-enter) the housing market.
Business tax relief to create jobs for Small and Medium businesses
The Government is extending temporary full expensing for an additional year (until June 2023). Temporary loss carry-back is also being extended to include the 2022-2023 income year.
The Government is building on prior tax reform for small and medium businesses by reducing the tax rate for small and medium companies, from 30 per cent in 2014-15, to 25 per cent from 1st July 2021.
From July 2022 the patent box will tax income derived from medical and biotech patents at a concessional 17 per cent tax rate, against the normal corporate tax of 30 per cent or 25 per cent for Small - Medium Enterprise.
For startups, the budget defers tax for employee share schemes, making it easier to offer equity incentives to start up employees and give them “a share in the economic value they create through their hard work and ingenuity.”
To read more about the budget highlights, we have linked CPA Australia’s summary which includes some excellent commentary from the Accounting Profession.