The federal and state government announced their budgets for 2021/22 in May. Below is a summary of the key issues.
Federal Budget Update
Personal income tax breaks
The government has announced that it will continue with the low and middle income tax offset for the 2022 financial year. This provides a tax offset of up to $1,080 for individuals earning under $90,000.
Self-education expenses will now be able to be claimed as a tax deduction in full. Previously, the first $250 of self-education expenses was excluded.
First Home Super Saver Scheme changes
The changes to the scheme will allow eligible participants to withdraw up to $50,000 of voluntary superannuation contributions from their super fund to put toward a deposit for their first home.
Superannuation – Work Test
From 1st July 2022 individuals will not be required to meet the work test to be eligible to make non concessional contributions into their superannuation funds.
Currently to be eligible to make non concessional contributions it is a requirement to work at least 40 hours over a 30 day period. This requirement will now be removed.
Superannuation – Downsizer Contributions
The government will reduce the age of eligibility to make downsizer contributions from 65 to 60. Downsizer contributions allow individuals to sell their own home, which they have lived in for at least 10 years, and then make a one off superannuation contribution of up to $300,000.
Extension of Instant Asset Write Off
An extension has been announced until 30th June 2023 for the instant asset write off. This allows an immediate deduction for the full cost of depreciating assets installed ready for use by 30th June 2023.
Extension of the Company loss carry back rules
This allows eligible companies to use tax losses from the 2020 – 2023 income years to be carried back and offset against profits from the 2019 and earlier income tax years. If eligible, this would allow companies to receive income tax refunds for previously paid income tax.
Victorian Budget Update
Mental Health & Wellbeing Levy
A levy will be introduced from 1 July 2022 for businesses with payroll in excess of $10 million. The levy will incur an additional 0.5% payroll tax surcharge.
Increase in Land Tax
Victorian Land Tax will increase by 0.25% for taxable land holdings over $1.8 million and 0.3% for taxable land holdings over $3 million.
Increase in Land Transfer Duty
Contracts entered into from 1st July 2021 for purchase of land with a taxable value over $2 million will attract transfer duty at the rate of $110,000 + 6.5% of the value over $2 million. This is up from $110,000 + 5% of the value over $2 million.
Reduction in Regional Payroll Tax Rate
The payroll tax rate for regional employers will reduce to 1.2125% from 1 July 2021.
Increase in Tax Free Threshold for Payroll Tax
The payroll tax threshold will increase from $650,000 to $700,000 from 1 July 2021.
