Budget 2021: Tax offsets for individuals and businesses to continue

Treasurer Josh Frydenberg said the new stimulus measure
Treasurer Josh Frydenberg said the new stimulus measure "will support the recovery and build on tax cuts we announced in last year's Budget". Picture: Sitthixay Ditthavong

Taxpayers will continue to see a boost in their tax returns, with the government set to continue the low and medium income tax offset to continue for another financial year.

In a move the government says will put $7.8 billion in the pockets of taxpayers, around 10.2 million people are expected to benefit from the offset staying in place.

It is worth up to $1080 for individuals earning up to $126,000.

Introduced as part of the government's reform to overall tax brackets in stages, finishing in 2024-25, the government says all the years of the low and medium income tax offset add up to up to $7020 for singles, most of which has already been delivered.

The government says by the end of the reform, 95 per cent of taxpayers will face a marginal tax rate of 30 per cent or less.

According to the government, the move will boost GDP by around $4.5 billion in 2022-23 and create an extra 20,000 jobs by the end 2022-23.

"A stimulus measure that will support the recovery and build on tax cuts we announced in last year's Budget and the Budgets before that," Treasurer Josh Frydenberg said.

"More of their money in their pockets to spend across the economy, creating jobs."

Tax incentives for businesses will also be extended in the budget, a measure the government says will deliver $16 billion in cuts for small and medium businesses by 2024-24.

Starting in July this year, the tax rate for small and medium companies will be 25 per cent.

READ MORE:

Measures announced in the October budget will also be extended, including temporary full expensing and temporary loss carry-back for another financial year.

These two measures will be worth $20.7 billion in tax relief over the next four years, the government says, and support $320 billion in investment.

According to the government, the effect of the business tax incentives introduced in October have already produced a result, with investment in machinery and equipment growing at the fastest quarterly rate in nearly seven years in the December quarter.

The measures are also expected to boost GDP, by around $2.5 billion this financial year, $7.5 billion next financial year and $8 billion in 2022-23. The government also estimates it will create 60,000 jobs by the end of 2022-23.

"Small and family businesses are the engine room of our economy, they are at the heart of every local community," Mr Frydenberg said.

"As they strive to recover, we need the tax system to work for them, not against them."

Mr Frydenberg announced an independent umpire would stand between small businesses and the tax office when it came to debt recovery actions.

READ MORE:

"We will take these disputes out of the courts and let small business get on with what they do best," he said.

Under the plan, the Administrative Appeals Tribunal will be given powers to pause or modify debt-recovery actions until the issue is resolved.

"This will provide an avenue for small businesses to ensure they are not required to start paying a disputed debt until the matter has been determined by the AAT," the budget papers said.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content:

This story Tax offsets for individuals and businesses to continue first appeared on The Canberra Times.