Latest tax changes you need to know

23Jun Latest tax changes you need to know

As another financial year comes to a close, a number of big tax changes are on the way! The major changes to note are:

Change in tax rate for Companies

  • The corporate tax rate for base rate entities for 2020-21 has reduced to 26% from 27.5%.

Enhanced Instant Asset Write-Off

  • As of 7.30pm 6 October 2020 the instant asset write off threshold of $150,000 changed to enable 100% write off of the cost of eligible new depreciating assets.
  • For businesses with an aggregated turnover of less than $50 million the 100% write off also applies to the business portion of eligible second hand assets.

On 1 July the super guarantee rate will rise from 9.5% to 10%.

  • Some pay periods will cross over between June and July when the rate changes.
  • The percentage employers are required to apply is determined based on when the employee is paid.
  • That means, if the pay period ends before 30 June, but the pay date falls on or after 1 July, the 10 per cent rate applies on those salary and wages which are ordinary time earnings. The date of salary and wage payment determines the rate of super guarantee payable, regardless of when the work was performed.

Carry back Loss Rules for Companies

  • Eligible corporate tax entities with less than $5 billion aggregated turnover in a relevant loss year can carry back a tax loss made in 2019-20, 2020-21 or 2021-22 to a prior income years tax liability to 2018-19.

STP reporting for closely held payees

  • All employing entities must now be registered for STP and report through an electronic method including closely held employee payments.
  • Employer clients must finalise their employees’ Single Touch Payroll (STP) data by 14 July. If you have closely held payees they may have a later due date for those payees only.

Tax Offsets for Individuals

  • The low income tax offset (LITO) increased from $445 to $700 from 1 July 2020.
  • The low and middle income tax offset will continue to be available for the 2020-21 and 2021–22 income year at a maximum amount of $1080.

As always do not hesitate to call 08 8211 9426 for a detailed explanation of the new tax changes.

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