It was a big Federal Budget night Tuesday night with greater spending across the board and a focus on tax offsets and incentives to assist small business and help more Aussies into their own homes.

We recap the big-ticket items below that are the most applicable to both our individual, business and SMSF clients:

2021 Budget Announcements

For Individuals

Extension of $1,080 tax offset

A very welcome addition to many household bank accounts is the extension of the $1080 low-to-middle-income tax offset to the 2022 financial year. Individuals will receive their offset once they lodge their tax return for the 2021/22 financial year with the final offset amount dependent upon their taxable income.

Applicable from: once 2021/22 tax return is lodged

Family home guarantee for single parents

A welcome proposal for single parents will see the Family Home Guarantee for Single Parents allocate 10,000 guarantees for eligible single parents over the next four years with as little as 2% deposit. The scheme designed to assist single parents with homeownership, regardless of whether they are first home buyers or not. Standard lending checks will apply with the Guarantee depending on the parent’s ability to service the loan.

Applicable from: 1st July, 2021

New home guarantee for first home buyers

The New Home Guarantee will be extended to include an additional 10,000 places for the 2021-22 year for first home buyers with as little as 5% deposit.

Applicable from: 1st July, 2021

Repeal of the work test for non-concessional contributions for 67 – 74-year olds

The current work test for Australians aged 67 – 74 will no longer apply for those wishing to make non-concessional super contributions or salary sacrificed contributions.

Applicable from: 1st July, 2022

Downsizer contributions age reduction

Currently, Australians aged 65 can make an after-tax contribution to their super up to $300,000 when they sell their family home. The minimum age will now be reduced from 65 to 60 in an attempt to free up housing for the younger generations and assist with housing affordability as baby boomers look to downsize in their retirement.

Applicable from: 1 July 2022

Removal of minimum super guarantee threshold

The super guarantee threshold of the current $450 will be removed, allowing those low-income earners earning less than $450 to be eligible for super payments by their employer.

Applicable from: 1 July 2022


For Businesses

Extension of instant asset write-off to 2023

The instant asset write-off for businesses with turnover of up to $5 billion will be extended until 2023. This will give businesses the opportunity to purchase plant and equipment and claim the offset until June 2023.

Applicable to: 30th June, 2023

Company tax rate drops to 25% from July 2021

The corporate tax rate will drop from the current rate of 27.5% to 25% for eligible businesses.

Applicable from: 1st July, 2021

Super guarantee set to rise to 10% from July 2021

Whilst no change to the super guarantee timing was given, the super guarantee rate is legislated to increase to 10% from 1st July, 2021, and 0.5% every year after until it reaches 12%.

Applicable from: 1st July, 2021


SMSF Residency Changes

The current SMSF residency rules will be relaxed through the extension of the central management and control test safe harbour from 2 to 5 years. We will also see the removal of the active member test for SMSFs and small APRA funds.

Applicable from: start of the first financial year after Royal Assent of the enabling legislation (predicted prior to 1st July, 2022)

If you’d like assistance with how the 2021 Federal Budget will affect you, give our team a call to arrange a consultation.