Australia 2021-22 Federal Budget

Tax Alert 2021 No. 01, 12 May 2021

At a glance

• 2021 Federal Budget delivered on 11 May
• Budget measures will be welcomed by small & medium enterprises
• Key business tax changes:
  • Extension of temporary full expensing and temporary loss carry back
  • Patent box tax regime
  • ATO Early Engagement Service
• Employment tax and personal tax measures:
  • Individual residency ‘bright line’ test
  • Retaining LMITO
  • Employee share schemes reform
• Financial services and superannuation changes

The Australian Federal Budget 2021 was delivered on 11 May 2021 by the Federal Treasurer Josh Frydenberg.

This Budget Tax Alert focuses on the key tax measures announced, to assist in your tax business planning and compliance processes.

The budget tax measures will be welcomed by small to medium enterprises whereas there are several other measure that benefit employers and individual taxpayers. Noteworthy tax measures in the budget include:

• Extension of temporary full expensing and temporary loss carry back measures until 30 June 2023
• A concessional patent tax rate of 17% to apply to income derived from medical and biotechnology patents
• ATO Early Engagement Service, or “concierge” to support businesses wishing to invest in Australia
• Individual tax residency based on 183 days (or more) physical presence in Australia as a ‘bright line’ test
• Retaining the Low and Middle Income Tax Offset (LMITO) for the 2021-22 income year
• Employee share scheme reforms
• Other business measures including intangible asset depreciation rates, removal of $450 superannuation guarantee threshold, excise reductions for certain brewers, digital games development tax offset etc.

Announcements also impact financial services, superannuation and some international tax issues.

Economic and overall policy issues in the 2021 budget are outlined on the EY Australia website.

Please contact your EY tax client service team to discuss the budget and its implications in more detail.