Federal Budget Highlights: 2020-21 by MinterEllison

MinterEllison provides us with updates on the Federal Budget for 2020/21.

After a year disrupted by the COVID 19 crisis, the federal budget is eagerly awaited. At the end of this turbulent and unpredictable year, the 2020-21 budget provides significant tax relief for individuals and businesses in response to the recession of this health and economic crisis.

The government is announcing $50 billion in tax relief for businesses and individuals with the hope of restoring the financial health of the economy as Australia experiences its first recession in nearly 30 years.

Budget takeouts:

  • The Government will introduce a measure to allow corporate tax entities to carry-back losses to previous income years, in the hope that it will provide cash flow support to previously profitable Australian businesses which are now incurring tax losses as a result of the economic impact of COVID-19.
  • A significant technical amendment to the corporate residency test was announced that clarifies that having 'central management and control' in Australia will not result in the company carrying on core commercial activities in Australia for the purpose of determining corporate tax residency.
  • Businesses with aggregated annual turnover of less than $5 billion will be able to deduct the full cost of eligible capital assets (i.e. depreciating assets) acquired from 7:30pm AEDT on 6 October 2020 and first used or installed by 30 June 2022.

Source: MinterEllison

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