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Budget 2020/21: the salary packaging summary

On Tuesday 6 October 2020, Treasurer Josh Frydenberg delivered the Federal Budget for 2020/21, describing it as an “economic recovery plan” to tackle the challenges brought about by the drought, bushfires, and the COVID-19 pandemic, which have impacted almost every Australian and every Australian business.

Some of the measures announced may affect your salary packaging benefits, so we’ve summarised the key announcements below.

Income tax cuts brought forward to 1 July 2020
The Government will bring forward Stage 2 of its legislated tax cuts to 1 July 2020. The 19 per cent threshold will rise from $37,000 to $45,000, and the 32.5 per cent threshold will go from $90,000 to $120,000. The 2020/21 income tax thresholds are as follows: 

 

Marginal tax rate for band
(excl. 2% Medicare levy) 
Taxable income band 2019-20  Taxable income band 2020-21 
Nil  $0 – $18,200  $0 – $18,200 
19%  $18,201 – $37,000  $18,201 – $45,000 
32.5%  $37,001 – $90,000  $45,001 – $120,000 
37%  $90,001 – $180,000  $120,001 – $180,000 
45%  $180,001 and over  $180,001 and over 

As the changes are being backdated to July 1 this year, those earning $50,000 per year will get $1,080 back and those on $90,000 a year will get $1,215 back. Those on more than $120,000 will get $2,565 back.  

Low- and middle-income tax offset will stay for an extra year   

The Government will provide additional targeted support to low- and middle-income earners with a one-off additional benefit from the low- and middle-income tax offset (LMITO) in 2020/21. The additional one-off LMITO is worth up to $1,080 for individuals or $2,160 for dual-income couples.  

Multiple work-related portable electronic devices  

From 1 April 2021, businesses with an aggregated annual turnover less than $50 million will be exempt from FBT on multiple work-related portable electronic devices (such as phones or laptops) provided to employees. This measure will remove the limit of one per FBT year on such items.  

Superannuation guarantee  

The compulsory employer superannuation guarantee of 9.5% is legislated to increase to 10% on 1 July 2021. There were no announced changes in the Federal Budget 2020-21 to defer this increase (the rate is progressively increasing until it reaches 12% on 1 July 2025).  

 

Posted by The Autopia Team

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