Morrison Government’s tax time reforms to secure Western Sydney's economic recovery

Thursday, 01 July 2021

Morrison Government’s tax time reforms to secure Western Sydney's economic recovery 


The Morrison Government is continuing to secure Australia’s recovery from COVID-19 with key measures taking effect on 1 July 2021 to create more jobs, rebuild our economy and set Australia up for the future.


Liberal Senator for Western Sydney, Senator the Hon Marise Payne, the raft of measures will provide tax relief to millions of hard-working Australians, incentivise businesses to invest and ensure our superannuation system works harder for Australians. 


“Our government promised lower taxes, and we are delivering on that commitment by slashing taxes for hardworking Australians across Western Sydney,” Senator Payne said.


“In 2015, the company tax rate for small and family business was 30 per cent, in 2021 the company tax rate for this same sector is now at 25 per cent.”


“These major measures are in addition to targeted funding our government has delivered for key projects, including in:

The Blue Mountains, including $2.03 billion for the upgrade of the Great Western Highway corridor, Katoomba to Lithgow.

The Hawkesbury, including $500 million in joint federal and state funding for the Hawkesbury River Third Crossing.

Parramatta, including over $700,000 for a new Cybersecurity Aid Centre located in Western Sydney University’s CBD campus; and 

Macarthur, including an additional $18 million for the much-needed upgrade of the Appin Road.”


Retaining the low-and middle-income tax offset


The Government is delivering further personal income tax cuts to support more than 10 million lowand middleincome earners. These tax cuts are worth up to $1,080 for individuals or up to $2,160 for couples. This is more money to spend in local businesses, giving them the confidence to take on an extra worker, offer an extra shift or buy a new piece of equipment.


Providing tax incentives for businesses


The Government is further supporting businesses by extending its temporary full expensing and temporary loss carry-back measures beyond this financial year.


This will allow more than 99 per cent of businesses employing 11.5 million Australians to deduct the full cost of eligible depreciable assets of any value in the year they are installed until 30 June 2023.


These measures are estimated to boost GDP by around $7.5 billion in 202122 alone and create around 60,000 jobs by the end of 2022-23.


Cutting taxes for small and medium businesses


The tax rate for small and medium companies with turnover below $50 million will decrease from 26 per cent to 25 per cent. For unincorporated small business such as sole traders, the tax discount rate will increase from 13 per cent to 16 per cent (up to the existing cap of $1,000). Access to a range of small business tax concessions will also be expanded with the turnover threshold rising from $10 million to $50 million, providing tax relief and reducing red tape for eligible businesses.


Supporting business research and development


Reforms to the Research and Development Tax Incentive take effect from 1 July. This includes generous tax offset rates above the company tax rate and includes an intensity test to reward companies that commit a greater proportion of their expenditure to R&D. In addition, the cap on eligible R&D expenditure will rise from $100 million to $150 million per annum.


Providing tax relief for small brewers and distillers


As announced in the 202122 Budget, the Excise remission scheme for alcohol manufacturers will provide brewers and distillers a full remission of any excise they pay, up to an annual cap of $350,000.


This builds on the Government’s 202021 MYEFO announcement to allow eligible alcohol manufacturers to receive their excise duty remission automatically, which reduces administrative overheads and provides additional assistance by addressing cash flow concerns. These changes also commence from 1 July.


Harriet McCready, co-owner of Mountain Culture Beer Co., welcomed the government’s tax relief package.


“After the COVID-19 shock, we’re thrilled the federal government is raising the refund cap,” Ms McCready said.


“We know brewers have been advocating for this, so I’m pleased to see the government has heard our concerns and is delivering.


“This tax relief will mean we can invest back into our business, hire more staff, increase our manufacturing capacity and retain more savings so we can grow.


“Importantly, we’ll be able to compete on a more even playing field internationally which will mean more people will be able to enjoy our beers produced right here in the Blue Mountains.”


Supporting first home buyers and single parent families


From 1 July, the Government will release an additional 30,000 places to eligible applicants under the First Home Loan Deposit Scheme, the New Home Guarantee program, and the Family Home Guarantee.


As announced in the 2021-22 Budget, the Government will establish the Family Home Guarantee to support single parents with dependants. From 1 July, 10,000 guarantees will be made available to eligible single parent families to build a new home or purchase an existing home with a deposit of as little as 2 per cent.


The Government will also extend the New Home Guarantee for a second year, providing an additional 10,000 places in 2021-22 for first homebuyers seeking to build a new home or purchase a newly built home with a deposit of 5 per cent.


Making superannuation work harder for Australians


As part of the most significant changes to superannuation in nearly 30 years, the Government is holding underperforming funds to account and strengthening protections for the retirement savings of millions of Australians.


The Government will require superannuation products to meet an annual objective performance test. Funds with products that fail the test will be required to inform members, while persistently underperforming products will be prevented from taking on new members. Members will be notified by 1 October 2021 if their product fails this test.


Australians will also have access to a single, trusted and independent source of information to compare superannuation products through a new interactive online YourSuper comparison tool from 1 July. In addition, trustees will be required to demonstrate how their actions are in the best financial interest of members.


The Your Future, Your Super reforms are estimated to save Australian workers $17.9 billion over 10 years.


Increasing flexibility for self-managed superannuation funds


The Government is providing Australians with more flexibility and control in managing their retirement savings. From 1 July, the maximum number of allowable members in self-managed superannuation funds and small APRA funds will increase from four to six.


Extending the temporary reduction in superannuation minimum drawdown rates


As part of the Government’s COVID-19 response, the superannuation minimum drawdown rates were reduced by 50 per cent for the 201920 and 202021 income years. To further support retirees and provide extra flexibility, the Government has recently extended the temporary reduction to the 2021-22 income year.


Implementing Financial Services Royal Commission recommendations


Consumers will continue benefiting from the Government’s strong record on implementing recommendations of the Hayne Royal Commission, with several reforms taking effect from 1 July.


A new independent body, the Financial Regulator Assessment Authority, will be established to review and report on the effectiveness and capability of the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority.


Balancing the rights of franchisors and franchisees


Significant changes to the Franchising Code of Conduct start today. This includes reforms to better balance the rights of franchisors and franchisees and improve access to justice though additional, more efficient dispute resolution processes.


Together, these comprehensive measures help secure Australia’s recovery from COVID-19 by putting more money in the pockets of hard-working Australians and supporting job creation.