2021-22 Federal Budget

Treasurer Josh Frydenberg tabled the 2021-22 Federal Budget last night.

The underlying cash deficit in 2021-22 is forecast to be $106.6 billion, equivalent to 5.0 per cent of GDP.
The budget position is expected to improve over the forward estimates to a deficit of $57 billion (2.4 per cent of GDP) in 2024-25 and to a deficit of 1.3 per cent of GDP by the end of the medium term.
Gross debt is expected to be $829 billion (40.2 per cent of GDP) at 30 June 2021 and to further increase to $963 billion or 45.1 per cent by the end of June 2022.
Australia’s economy is forecast to grow by 1.25 per cent in 2020-21 and 4.25 per cent in 2021-22. The unemployment rate is expected to fall to 5 per cent in June 2022.

Low and middle income earners will continue to get a tax cut worth up to $1,080 per individual in 2021-22 as the temporary low and middle income tax offset (LMITO) is retained for an additional year.
Temporary full expensing and temporary loss carry-back will be extended for another year until 2022-23. Businesses with a turnover of up to $5 billion will be able to immediately deduct the full cost of eligible depreciable assets acquired from 7:30pm (AEDT) on 6 October 2020 and first used or installed by 30 June 2023. Eligible companies will also be able to carry-back tax losses from the 2022-23 income year to offset previously taxed profits as far back as the 2018-19 income year.
From 1 July 2022, a patent box will be introduced for medical and biotech companies. The patent box will tax income derived from Australian medical and biotech patents at 17 per cent. Normal corporate tax rates are 25 per cent for small and medium companies and 30 per cent for others.
From 1 July 2022, A digital games tax offset (DGTO) will be introduced to promote the growth of the digital games development industry in Australia. Eligible game developers will receive a 30 per cent refundable tax offset for qualifying Australian games expenditure.

From 1 July 2022, the child care subsidy for the second and subsequent child will receive a 30% booster. The annual cap of $10,560 per child will also be removed.

The $450 per month superannuation threshold will be removed to expand the superannuation guarantee, improving coverage and increasing retirement savings, particularly for women.
Changes are made to superannuation to support older Australian. This includes repealing the work test for non-concessional and salary sacrificed superannuation contributions and reducing the minimum age of the downsizer superannuation contribution.

A four year newly-arrived resident’s waiting period will be applied across most welfare payments from 1 January 2022.
The New Employment Services Model (NESM) will replace Jobactive from 1 July 2022. This includes establishing a new digital employment services platform.