2021/22 Federal Budget Newsletter

On 11th May 2021 the Government delivered the 2021 Federal Budget, just seven short months after the delayed COVID-19 budget was released.

Please note, until legislated these Federal Budget announcements are only proposed changes.

The highlighted areas we feel are most valuable to you and should be bought to your attention are:

Self-Education expenses deduction
Currently the first $250 of self-education expenses incurred while studying a course that is sufficiently connected to your employment income is not deductible.

The Government propose to remove this exclusion on the first $250 of self-education expenses to allow for a full deduction starting from the first year the legislation is passed.

Superannuation Work Test Abolished
The superannuation work test exemption will cease to exist for taxpayers under the age of 75 making non-concessional contributions with effect from the start of the first financial year after legislation is passed which will likely be the 2022/23 financial year.

Currently, individuals aged 67 to 74 are only able to make voluntary superannuation contribution where they have worked at least 40 hours in a 30 day period during the financial year of the contribution.

Once this legislation has passed, individuals under the age of 75 will be able to make non-concessional contributions with the only limitation being that of contribution caps. If you are aged 67-74 and wish to make a personal deductible contribution, the work test will still need to be meet.

Super Guarantee Eligibility
Presently employers are exempt from making super contributions for employees who have gross wages less than $450 per month.
This will take effect from the start of the first financial year after legislation is passed which will likely be the 2022/23 financial year.

Super Guarantee Rate Change*
Starting 1st July 2021 Employers are required to pay 10% super guarantee contributions for all employees who have gross wages above $450 per month and meet the current legislated requirements.

Downsizer Superannuation Contributions
With effect from the start of the first financial year after legislation is passed which will likely be the 2022/23 financial year, individuals aged over 60 years will be eligible to make downsizer contributions to their superannuation fund of up to $300,000 when selling their home which they have owned for over 10 years. Currently this is only applicable to individuals aged 65 years and over.

Full expensing of Plant and Equipment assets for Businesses
Small Businesses with a turnover of less than $5 billion are entitled to an immediate tax deduction for depreciating assets purchased and installed for use by 30th June 2022. The Government has extended this to 30th June 2023.

Please be aware motor vehicles are still subject to cap limits for GST and depreciation deductibility in most cases. If you find yourselves looking to update your motor vehicle in the future, we invite you to contact us to determine your deduction eligibility.

Please contact our office on 08 8523 0999 or admin@milaneseco.com.au if you wish to discuss how these items directly impact your personal situation.

* this did not form part of the 2021 Federal Budget but an important change that will be occurring for businesses and individuals in the coming months.

Sources:
NTAA 2021/22 Budget Summary
Institute of Public Accountants 2021 Federal Budget Report
CPA Federal Budget 2021-22 Report