Personal income tax changes
Retaining the Low and Middle Income Tax Offset (‘LMITO’) for the 2022 income year
The LMITO has been retained for one more income year, so that it will still be available for the 2022 income year.
The LMITO is a non-refundable tax offset that provides tax relief for low and middle income taxpayers and is available in addition to the Low Income Tax Offset (‘LITO’).
Increasing the Medicare levy low-income thresholds
Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year is increased, as follows:
- The threshold for singles will be increased from $22,801 to $23,226.
- The family threshold will be increased from $38,474 to $39,167.
For each dependent child or student, the family income thresholds increase by a further $3,597, up from the previous amount of $3,533.
Reducing compliance costs for individuals claiming self-education expense deductions
The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education.
Currently, the first $250 of a prescribed course of education expense is not tax deductible.
Changes to the First Home Super Saver (‘FHSS’) scheme
The Government has announced that it will make the following changes to the FHSS scheme.
Increasing the maximum releasable amount to $50,000
The Government will increase the maximum releasable amount of voluntary concessional and non- concessional contributions under the FHSS scheme from $30,000 to $50,000, to assist first home buyers in raising a deposit more quickly.
Voluntary contributions made from 1 July 2017 up to the existing limit of $15,000 per year will count towards the total amount able to be released.
Changes affecting business taxpayers
Depreciating assets write off extended until 30 June 2023
In the 2021/22 Federal Budget, the Government has announced that temporary full asset write off will be extended by 12 months to allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
Temporary loss carry-back extension
The loss carry-back measure will be extended to allow eligible companies (i.e., with aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.
Debt recovery for small business
The Government has announced that it will allow small business entities (including individuals carrying on a business) with an aggregated turnover of less than $10 million per year to apply to the Small Business Taxation Division of the Administrative Appeals Tribunal (the ‘Tribunal’) to pause or modify ATO debt recovery actions, such as garnishee notices and the recovery of general interest charge or related penalties, where the debt is being disputed in the Tribunal.
Superannuation related changes
Removing the work test for voluntary contributions
The Government has announced that it will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional contributions (including under the bring-forward rule) and salary sacrifice contributions without meeting the work test, subject to existing contribution caps.
Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions.
Reducing the age limit for downsizer contributions
The Government will reduce the age limit from which downsizer contributions can be made by eligible individuals, from 65 to 60 years of age.
The downsizer contribution allows eligible individuals to make a one-off, after-tax contribution to their superannuation fund, of up to $300,000 per person, following the disposal of an eligible dwelling, where certain conditions are satisfied. Under the current requirements, an individual must be at least 65 years of age at the time of making the relevant contribution, for the contribution to qualify as a downsizer contribution.
Removing the $450 per month threshold for Superannuation Guarantee (‘SG’) eligibility
The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid SG contributions by their employer.