Federal Budget 21: What it means for electrical contractors
Personal income tax cuts, support for apprenticeships, HomeBuilder, and temporary full expensing are among the highlights out of the Federal Budget 2021-22.
Many of the initiatives will be familiar to electrical contractors as they are extensions of existing programs.
Personal income tax cuts
The the low- and middle-income tax offset (LMITO) will be retained in 2021-22. The LMITO is worth up to $1,080 for individuals or $2,160 for dual income couples.
Cutting taxes for small and medium businesses
More than $16 billion in tax cuts will be to small and medium businesses by 2023-24 with around $1.5 billion flowing in 2019‑20.
This includes reducing the tax rate for small and medium companies, from 30 per cent in 2014‑15 to 25 per cent from 1 July 2021.
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The Boosting Apprenticeship Commencements program will be extended with an $2.7 billion to be spent.
According to the government, the demand-driven program is expected to support more than 170,000 new apprentices and trainees by paying businesses a 50 per cent wage subsidy over 12 months for newly commencing apprentices or trainees signed up by 31 March 2022. The subsidy will be capped at $7,000 per quarter per apprentice or trainee. Similarly, pathway services for 5000 women to commence in a non-traditional apprenticeship.
Boosting workforce participation
The Child Care Subsidy will be increased by 30 percentage points for the second or subsequent child, up to a cap of 95 per cent. This will ease cost of living pressures for over 250,000 Australian families and address the higher out of pocket costs faced by families with multiple young children. The removal of the Child Care Subsidy annual cap will also reduce barriers to working. With these changes, families are not penalised by hitting the cap
The construction commencement period for the HomeBuilder program will be extended to 18 months to smooth out the construction pipeline and further support construction jobs.
Temporary full expensing
Temporary full expensing allows eligible businesses with aggregated annual turnover or total income of up to $5 billion to deduct the full cost of eligible depreciable assets. Assets must be acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
Temporary loss carry-back
Temporary loss carry-back will also be extended by one year. This will allow eligible companies to carry-back tax losses from the 2022-23 income year to offset previously taxed profits as far back as the 2018-19 income year.
Increased rights for small business to pause the collection of disputed debts
The government has promised that businesses with less than $10 million turnover will have simpler, faster, and cheaper access to pausing or modifying Australian Taxation Office debt recovery actions in relation to cases under review by the Administrative Appeal Tribunal (AAT) by broadening the AAT’s powers to pause actions until the underlying dispute is resolved. Such action includes recovery of the underlying debt, application of garnishee notices, and/or related penalties and interest.