Key Tax Changes You Need To Know For New FY

The Federal Budget 2021-2022 outlines some tax changes on different areas, including individuals, business taxes and superannuation. Here are some main points that every taxpayer should know

Individual Tax

• The maximum non-refundable Low-Middle Income tax offset in 2021-2022 will be extended.

• The government planning to remove the self-education expenses first $250 threshold after the date of Royal Assent enabling legislation.

• There will be a new simplifier residency rule to determine Australian tax resident status.

Business Tax

• Instant Asset write-off for asset first used or installed ready from 12th March 2020 to 30th June 2021 (for business with aggregated turnover <$500 million). This policy also extended until 30th June 2023 for eligible assets acquired after 6th October 2020 and first used and installed by 30th June 2023.

• For business less than $5 billion turnover can carry back tax loses incurred in an eligible year against taxed profits in a previous year until 2022-23 financial year.

• The corporate tax rate for base rate entity will be 26% for financial year 2020-2021 and the tax rate for base rate entity for financial year 2021-2022 will be 25%.

Superannuation

• Self-managed Super Funds (SMSF) members who live overseas can have a two-year window to manage their funds while temporarily living overseas. The active member test will be removed to enable members from overseas to contribute to their fund.

• The tax relief for merging super funds now become permanent.

• The government announce to reduce eligible age to make downsizer contributions into superannuation from 65 years of age to 60 years of age.

• The super guarantee percentage will be 10% for FY2021-2022, and 0.5% increase per year until FY2025-2026.