The major tax-related measures announced in the Budget, includes the following:-

  1. Personal tax rates there were no changes made to personal tax rates, the Government had already brought forward the Stage 2 tax rates to 1 July 2020. The Stage 3 personal income tax cuts remain unchanged and will commence in 2024-25 as already legislated.
  2. Medicare levy low-income thresholds for 2020-21 to increase –
    • for the 2020-21 income year, the Medicare levy low-income threshold for singles will be increased to $23,226 (up from $22,801 for 2019-20).
    • for couples with no children, the family income threshold will be increased to $39,167 (up from $38,474 for 2019-20).
    • the additional amount of threshold for each dependent child or student will be increased to $3,597 (up from $3,533).
  3. Low and Middle Income Tax Offset (LMITO) retained for 2021-22 – the Government will retain the low and middle income tax offset for the 2021-22 income year. The LMITO provides a reduction in tax of up to $1,080.
  4. Child care subsidies to change 1 July 2022 – the Government confirmed that it will make an additional $1.7b investment in child care. The changes will commence on 1 July 2022 (that is not in the next financial year).
  5. Self-education expenses – The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education. The first $250 of a prescribed course of education expense is currently not deductible.
  6. Individual residency test reformed – the Government will replace the existing tests for tax residency of individuals with a primary “bright line” test under which a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.
  7. Loss carry-back provisions extended – the loss years in respect of which an eligible company (aggregated annual turnover of up to $5 billion) can currently carry back a tax loss (2019-20, 2020-21 and 2021-22) will now be extended to include the 2022-23 income year.
  8. Temporary claiming of full tax deduction for eligible depreciable assets extended – the Government will extend the 2020-21 temporary full expensing measures until 30 June 2023. This will allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to claim a tax deduction for the full cost of eligible depreciable assets of any value (excluding land & buildings), acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
  9. Employee share schemes – the Government will remove the cessation of employment as a taxing point for the tax deferred employee share schemes along with other changes designed to cut down on “red tape” for certain employers.
  10. Tax Office debt recovery for small business – the AAT will be given the power to pause or modify ATO debt recovery action in relation to disputed debts of small businesses.

Source:  Tax & Super Australia – 2021 Federal Budget Report