Article Contents

How to set up a company in Australia

The following steps outline how to set up a company. This can be complicated, and you should seek advice from an accountant who will explain the intricacies and help you decide what is best for you.

1. Decide on a name for the Company

The company name can be anything you want, however it can’t be the same or similar to another registered company or business name. There is a Name Availability tool on ASIC’s website which you can use to check for availability. If it is similar to another company name or business name, it may require manual processing with ASIC upon submitting the relevant forms. The company name must include the liability of its members at the end of the name which means appending ‘Pty Ltd’ in most cases. For further information on company names, you can visit ASIC’s website.

2. Decide on the Officers, Members and Location of the Company

There are a few different roles which are required to be filled within a company as per the Corporations Act 2001. The roles most people would be familiar with are directors and shareholders so let’s start there. To put it simply, directors are responsible for running the company and shareholders are the legal owners of the company. Directors can also be shareholders of the company and vice versa.

The other two roles which aren’t as well known are the company secretary and the public officer. These are statutory roles and simply speaking, the secretary is responsible for ensuring proper governance and corporate compliance of the company and the public office is the representative of the company to the Australia Tax Office.

Finally, you will need to decide on where the company is going to be located. There are to locations you will need to specify. The first is a Registered Office, which is the statutory address for the company where all documentation and communication related to the company is sent. It is also where notices for the company will be served and is required to be open during office hours. This is most commonly your Tax Agent. The second is the principal place of business which is reasonably self-explanatory, however is the place where decisions are made, and the books of the company are maintained.

Further explanations of these concepts can be found below in the Company Definitions section.

3. Draft Company Constitution

Once you have all the key stakeholders of the business worked out, the next step is to draft a company constitution. This can be done by a solicitor who specialises in corporate law.

Many accountants do provide a service to be able to set up companies however they do not draft the constitution themselves, instead outsource it to a legal document provider (i.e. use a legal template).

4. Lodge ASIC Form 201

As companies in Australia are regulated by ASIC, to be able to establish a company, you need to lodge a Form 201 with them. This can be done yourself using the Business Registration Service, which is a tool provided by the government, however we recommend doing this through an accountant to ensure it is done correctly. Once you lodge a form with ASIC, it can be time consuming and costly to make any changes.

5 .Apply for Director Identification Number

Directors of Australian companies are now required to apply for a Director Identification number. A director ID is a unique identifier that will be kept indefinitely and applied across companies. You will need to apply for your Director ID yourself.

From now until 5 April 2022, you will have 28 days to obtain your director ID after a company has been established. After 5 April 2022, you will need to obtain this before your company can be set up. If you do not obtain your Director ID within this timeframe, ASIC will impose hefty penalties and fines.

The fastest way to receive your director ID is to apply online through the Australian Business Registry Services (ABRS). How to apply online

To complete your online application, you will need:

  • A standard or strong identity strength myGovID. If you don’t have one, please visit How to Set up myGov ID.
  • An individual Australian tax file number (TFN). Providing your TFN is optional but it will speed up the process.
  • Your residential address, as recorded by the Australian Taxation Office (ATO).
  • Answers to two questions based on details we know about you from the following documents:
    – Bank Account Details
    – Notice of Assessment
    – Dividend Statement
    – Centrelink Payment Summary
    – PAYG Payment Summary

There are also options to apply for a Director ID application via phone and paper – Application Options.

6. Apply for the ABN and TFN

Once the company has been set up, ASIC will issue an Australian Company Number (ACN). If you plan on carrying on a business in the company, you will need to apply for an Australian Business Number (ABN) as well as a Tax File Number (TFN).

These applications are completed online via the Australian Business Register (ABR) and typically completed by an accountant. If all correct details of the officers and shareholders are provided, the ABN should be issued instantly with the TFN shortly after.

It can however take up to 28 days for the ABR to issue the ABN for a company if they need to undertake any manual checks of the details provided as part of the registration.

7. Open a company bank account

Now that the company is setup and it has all of its registrations, you can now setup a bank account. The name of the bank account should be in the name of the company (e.g. Example Company Pty Ltd).

To setup a bank account for a company, most banks will require the following documents:

  • Signed copy of the Company Constitution
  • ASIC Extract (to verify current officeholders and shareholders)
  • Certificate of Incorporation

In addition to the documents above, you should have handy the ABN and TFN which they may require. Also, don’t leave the documents with the bank! They should be able to take copies before you leave.

One final tip, if you are setting up a bank account for your company to carry on a business, it is important to partner with the right bank. Things to consider are whether provide commercial lending facilities, do they provide a merchant facility and do they provide data feeds to online accounting software like Xero?

What is a company?

A company is a unique structure which for statutory purposes imitates the characteristics of a natural person. It is a completely separate legal entity from its owners and means that it can raise debt, sue and be sued. A company can derive an income, hold assets, raise debt, pays tax, carries on a business and a lot more. Companies are managed by officers which are called directors and secretaries.

Company definitions

Term Definition

Director

 In short, directors are responsible for the oversight of the company. As a director of a company, you must be across all the company’s affairs including its finances, operations, and contractual obligations to name a few.

Secretary

 The person nominated to be the secretary of a company is responsible for corporate compliance. This includes but is not limited to ensuring business discussed in directors’ meetings or board meetings is accurately recorded in the form of minutes, ensuring meetings are conducted in accordance with the Company’s Constitution, preparation and circulation of reports for the meetings and reporting to ASIC any changes to the company.

Public Officer

 The Public Officer of a company is the nominated representative to the Australian Tax Office and is responsible for ensuring the company meets it obligations under the Income Tax Assessment Act. While it is not mandatory to appoint a Public Officer upon establishment of a company, a person does need to be appointed within 3 months of the company deriving income or carrying on a business.

Shareholder

 A shareholder is a person or an entity which owns shares in a company. Shareholders are entitled to profits of the company and have voting rights on specific decisions outlined in the Company’s Constitution. It is important to note that there can be different types of share classes which a shareholder can hold which entitle them to different things, however for the purpose of this blog, we will assume all shareholders are equal. The most common kind of shares are Ordinary shares.

Registered Office

 All companies must have a Registered Office which is the address of where you wish for official documents, communications, or notices to the company to be delivered. This does not have to be where the principal place of business takes place, this is nominated separately. It can’t be a PO Box and is required to be an address in Australia. It is common for the Registered Office to be your accountant’s office as it is required to be open to the public during specified hours.

Principal Place of Business

 The principal place of business is as the name suggests, there is really nothing more complicated to it than that. If you have multiple places of business, it should be where most of the business is conducted, company’s financials are maintained, and decisions are made.

Company advantages and disadvantages

Company advantages

Company disadvantages
Lower Tax RatesThe tax rate for companies, either 25% or 30% depending on the source of income, is lower than the highest individual marginal tax rate of 45% plus 2% Medicare levy. Directors LiabilitiesThe directors of companies can be held liable for the company’s debts. Depending on the circumstances, the directors of a company can be liable to pay losses suffered by the company, unpaid superannuation, tax and pay as you go withholding.
Limited Liability for ShareholdersThe liability of shareholders within a company is limited to the amount of capital the shareholder has put it. Shareholders do need to be careful that they only act in their capacity as a shareholder and they don’t cross the line of directors duties as the courts to have the ability to deem shareholders as a shadow director if they are carrying out the same roles and responsibilities as a director. Public accessible recordsAs companies are regulated by ASIC, the details of the company are available on a public register. This register is administered by ASIC and any changes you wish to make need to be submitted to ASIC.
Raise capital or debtCompanies can both raise capital and also raise debt. Companies can raise capital through the issue of new shares in the company. They can also source debt from lending institutions in their own right. Upfront and ongoing costsThe costs involved in setting up a company can be expensive. The company is also required to pay an annual review fee to ASIC ($276 in FY2022). Depending on the assets held by the company and the activity the company participates in, the cost of administering the company can be expensive as well.
Retain Profits One of the main differences of companies to many other entity structures is that they have the ability for the profits to be retained within the company. Other entity structures require all of the profits to be paid out in the year they are made otherwise tax on the income can potentially be assessed at the highest marginal rate. This can be an effective tax planning tool. Flexibility of distributionsThe ownership of a company is determined by who its shareholders are. In its simplest form, the profits paid out of the company, in the form of dividends, needs to be paid out in proportion to each shareholders percentage. For example, if you owner 50% of the shares in a company, you are entitled to receive 50% of the dividends declared. It is important to note that share structures can be more complicated where there are different classes of shares which can have different rights and entitlements.
Ease of ownership transferIt can sometimes be easier and cheaper to transfer the ownership of assets by transferring/selling shares. One of the major cost benefits is the sale of shares generally does not attract either transfer duty (stamp duty) or Goods & Services Tax. Entity nameCompanies are all recorded on a register administered by ASIC who ensure that there are no two companies with the same name. This can also cause delays upon the establishment of a company if the name is similar to another company. The reason for this is it will be flagged for manual review by ASIC and can take a number of hours.

For example, as of July 2021, the costs to set up a company from Quill Group is $1,712 (Inc GST) which includes the following:

How much does it cost to set up a company?

The costs involved to set up a company include:

  • Legal and taxation advice on the best structure for your situation
  • Drafting of the constitution
  • Preparation and lodgement of the ABN and TFN applications
  • Setting up a bank account
  • ASIC incorporate fee
  • Preparation of Company Constitution (through our legal document provider)
  • ASIC incorporation fee which is currently $512, which indexes annually
    Preparation and lodgement of ABN TFN applications

Please also note that the above fees are purely for the establishment of the company – it does not include any legal, accounting or taxation advice.

Frequently Asked Questions FAQs

Who can set up a company?

As we have discussed above, there are a few different elements to establishing a company. A corporate solicitor is best placed to assist with the drafting of a constitution and an accountant is best placed to assist with the facilitation of the company establishment process.

Accountants can provide you with a constitution however these are generally acquired through a legal document service provider who provides the legal sign off on the documents.

Do companies pay less tax?

This depends on your circumstances you should seek advice from an accountant to determine if this will be the case for you.

First of all, companies are tax using a flat rate vs a natural person who is taxed using a marginal tax rate system, which effectively means the more money you earn, the more tax you pay.

Picture1 1 768x502

Note: This is a simplified illustration not including any deductions, offsets or surcharges.

You will notice in the illustration there are two types of tax rates, base rate entities are taxed at 25% and all other companies are taxed at 30% (FY2021-22). While we are not going into detail as to what a base rate entity is here, in simplistic terms, it is a company that is carrying on a business. You can view further information on what a base rate entity is on the ATO’s website.

Secondly, you need to consider whether the income you are receiving is Personal Service Income (PSI). PSI is income that is mainly a reward for an individual’s personal efforts or skills. There are rules in place which prevent people from diverting their income to a company in an effort to reduce their tax if the income they receive is PSI. We won’t go into any further detail on PSI here however you can read more about it on the ATO’s website or you can use their PSI determination tool to see if your income is PSI.

Can I still be personally liable for debts of the company?

This depends on whether you are a director of the company or not. As directors are the people charged with the responsibility of running the company, they can be personally responsible for certain liabilities.

You need to apply for your own director ID. Unfortunately we are unable to do this on your behalf, however, please know that we are here to assist you through the process if needed.

The fastest way to do this is online using the myGovID app.

 To complete your online application, you will need:

There are also options to apply for a Director ID application via phone and paper (these two options are more time consuming) Application Options.

Step 1 – Set up myGovID

You will need a myGovID with a Standard or Strong identity strength to apply for your director ID online. If you live outside Australia and can’t get a myGovID with a Standard or Strong identity strength, you will need to apply with a paper form and provide certified copies of your identity documents. If you live in Australia and:

myGovID is different from myGov

Step 2 – Gather your documents

You will need to have some information the ATO knows about you when you apply for your director ID:

Examples of the documents you can use to verify your identity include:

Step 3 – Complete your application

Once you have a myGovID with a Standard or Strong identity strength, and information to verify your identity, you can log in and apply for your director ID. The application process should take less than 5 minutes.

Apply now

Once your myGovID is setup, or if you already have a myGovID, go to the below link to start your application

https://www.abrs.gov.au/director-identification-number/apply-director-identification-number

Click Apply now with myGovID and follow the prompts.

If you have any queries regarding this process, please do not hesitate to contact us.

From November 2021, directors of Australian companies will need to verify their identity and apply for a Director Identification Number as part of a new statutory requirement. A Director ID is a unique identifier that will be kept indefinitely and applied across companies.  Applications for DINs will open from November 2021.

Please note that Accountants are unable to apply for a DIN on behalf of an individual. The application is required to be submitted by the person who the DIN is associated with. In light of this, we will be here to assist with any queries you may have with the application process.

What is a Director Identification Number?

A director identification number (DIN) is a 15-digit unique identifier, which will be allocated to a director for life. The DIN aims to help prevent the use of fictitious director identities, help regulators trace directors’ relationships with companies over time and better identify a director’s involvement in unlawful activity such as illegal phoenixing.

You will legally be required to obtain a DIN if you’re a director of a:

  • Company
  • Aboriginal and Torres Strait Islander corporation
  • Corporate trustee, for example, of a self-managed super fund
  • Charity or not-for-profit organisation that is a company or Aboriginal and Torres Strait Islander corporation
  • Registered Australian body, for example, an incorporated association that is registered with the Australian Securities and Investments Commission (ASIC) and trades outside the state or territory in which it is incorporated
  • Foreign company registered with ASIC and carrying on business in Australia (regardless of where you live).

Deadlines for Applying

You will be able to apply for a DIN from 1 November 2021. When you must apply for your Director ID depends on the date you became a director:

Director typeDeadline to submit DIN application
Existing directors or those who are appointed as a director on or before 31 October 202130 November 2022
Appointed as a director between 1 November 2021 and 4 April 2022Need to apply for DIN within 28 days of their appointment
Appointed as a director from 5 April 2022Need to apply for DIN prior to their appointment
CATSI Act existing directors who are appointed on or before 31 October 202230 November 2023
CATSI Act directors who are appointed from 1 November 2022Need to apply for DIN prior to their appointment

How to Apply for a DIN:

Online Application

The fastest way to receive your director ID is to apply online through the Australian Business Registry Services(ABRS). How to apply online

To complete your online application, you will need:

  • A standard or strong identity strength myGovID. If you don’t have one, please visit How to Set up myGov ID.
  • An individual Australian tax file number (TFN). Providing your TFN is optional but it will speed up the process.
  • Your residential address, as recorded by the Australian Taxation Office (ATO).
  • Answers to two questions based on details we know about you from the following documents:
    • Bank Account Details
    • Notice of Assessment
    • Dividend Statement
    • Centrelink Payment Summary
    • PAYG Payment Summary

There are also options to apply for a Director ID application via phone and paper –  Application Options.

 Your Director ID obligations

Your obligations as a director include:

  • applying for a Director ID within the relevant timeframe or when directed by the Registrar to do so;
  • not applying for more than one Director ID (unless directed by the Registrar to do so);
  • not misrepresenting your Director ID to a Commonwealth body, company, registered Australian body or Aboriginal and Torres Strait Islander corporation; and
  • not being involved in a breach of the above Director ID obligations.

 If you do not meet your obligations there may be civil or criminal penalties; and you may be issued with an infringement notice.

Where to from here?

As there will be penalties involved if you do not obtain a DIN within the elected timeframe, we would recommend that you organise this as soon as possible.

To learn more about Director Identification Numbers, or for any assistance with your application, please do not hesitate to contact us. Even though we are unable to prepare this on your behalf, we would like to assure you that we are here to assist with this process.

Budget Summary

The 2021-22 Federal Budget is a balancing act between a better than anticipated deficit ($106 bn), an impending election, and the need to invest in the long term.

Key initiatives include:

  • Extension of temporary full expensing and loss-carry back providing immediate deductions for business investment in capital assets
  • Introduction of a ‘patent box’ offering tax concessions on income derived from medical and biotech patents
  • Tax and investment incentives for the digital economy
  • Extension of the low and middle income tax offset
  • Child care subsidy increase for families with multiple children
  • $17.7 billion over 5 years to reform aged care
  • $2.3 billion on mental health infrastructure and programs
  • New and extended home ownership programs for first home owners and single parents

It is also a human budget (cynics would say voter focussed), with $17.7 billion dedicated to aged care, more money in the pockets of low income earners, the COVID vaccine rollout, $2 billion for mental health, a women’s economic package including a child care subsidy increase and funding to prevent violence, and a Royal Commission into defence and veteran suicide.

There will also be a lot of money flowing through to the private sector to those that are capable of developing new technologies. Momentum and drive to develop new initiatives is a strong theme and in some circumstances the Government will offset the risk of those initiatives – if you are in the right sectors.

The $1.2 billion digital economy strategy seeks to rewrite Australia’s underlying infrastructure and incentivise business to boldly develop towards a digital future. The program is broad – from upskilling the workforce, the expansion of consumer digital rights, the development of SME digitisation, Government service delivery, to cybersecurity.

Beyond digital, co-funding and seed capital is available to those developing new technologies that reduce emissions, and grow new export markets and jobs in this sector.

Productivity is a key take-out with several measures targeted at encouraging industry to innovate and develop including the extension of full expensing and the loss carry back measures.

Budget Detail

For You & Your Family

Low and middle income tax offset extended

Date of effectFrom 1 July 2021 to 30 June 2022

As widely predicted, the Low and Middle Income Tax Offset (LMITO) will be extended for another year. The LMITO provides a reduction in tax of up to $1,080 for individuals with a taxable income of up to $126,000 and will be retained for the 2021-22 year.

Taxable incomeOffset
$37,000 or less$255
Between $37,001 and $48,000$255 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,080
Between $48,001 and $90,000$1,080
Between $90,001 and $126,000$1,080 minus 3 cents for every dollar of the amount above $90,000

The tax offset is triggered when a taxpayer lodges their tax return.

Medicare levy low income threshold

Date of effect1 July 2020

The Government will increase the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2020 to take account of recent movements in the CPI so that low-income taxpayers generally continue to be exempt from paying the Medicare levy.

2019-202020-21
Singles$22,801$23,226
Family threshold$38,474$39,167
Single seniors and pensioners$36,056$36,705
Family threshold for seniors and pensioners$50,191$51,094

For each dependent child or student, the family income thresholds increase by a further $3,597 instead of the previous amount of $3,533.

$250 self-education expense reduction removed

Date of effectFirst income year after the date of Royal Assent of the enabling legislation

Currently, individuals claiming a deduction for self-education expenses sometimes need to reduce the deductible amount by up to $250. The rules in this area are complex as they only apply to self-education expenses that fall within a specific category and certain non-deductible expenses can be offset against the $250 reduction. This reduction will be removed, which should make it easier for individuals to calculate their self-education deductions.

Child care subsidy increase for families with multiple children under 5 in child care

Previously announced

Date of effect1 July 2022

 From 1 July 2022 the Government will:

  • Increase child care subsidies available to families with more than one child aged five and under in child care, and
  • Remove the $10,560 cap on the Child Care Subsidy.

For those families with more than one child in child care, the level of subsidy received will increase by 30% to a maximum subsidy of 95% of fees paid for their second and subsequent children (tapered by income and hours of care).

Under the current system, the maximum child care subsidy payable is 85% of child care fees and it applies at the same rate per child, regardless of how many children a family may have in care.

Why? In October 2020, analysis by the Grattan Institute revealed that mothers lose 80%, 90% and even 100% of their take-home pay from working a fourth or fifth day after the additional childcare costs, clawback of the childcare subsidy, and tax and benefit changes are factored in.

 “Unsurprisingly, not many find the option of working for free or close to it particularly attractive. The “1.5 earner” model has become the norm in Australia. And our rates of part-time work for women are third-highest in the OECD. 

Childcare costs are the biggest contributor to these “workforce disincentives“. The maximum subsidy is not high enough for low-income families, and the steep taper and annual cap limit incentives to work beyond three days, across the income spectrum,” the report said.

Media release – Making child care more affordable and boosting workforce participation

Underwriting home ownership

Previously announced

The Government has announced new and expanded programs to assist Australians to buy a home.

2% deposit home loans for single parents

Date of effect1 July 2021

The Government will guarantee 10,000 single parents with dependants to enable them to access a home loan with a deposit as low as 2% under the Family Home Guarantee. Similar to the first home loan deposit scheme, the program will guarantee the additional 18% normally required for a deposit without lenders mortgage insurance.

The Family Home Guarantee is aimed at single parents with dependants, regardless of whether that single parent is a first home buyer or previous owner-occupier. Applicants must be Australian citizens, at least 18 years of age and have an annual taxable income of no more than $125,000.

Media release – Update from the Australian Government: Family Home Guarantee

Media release – Improving opportunities for home ownership

5% deposit home loans for first home buyers building new homes

Date of effect1 July 2021 to 30 June 2022

The First Home Loan Deposit Scheme will be extended by another 10,000 places from 1 July 2021 to 30 June 2022. Eligible first home buyers can build a new home with a deposit of as little as 5% (lenders criteria apply). The Government guarantees a participating lender up to 15% of the value of the property purchased that is financed by an eligible first home buyer’s home loan. Twenty seven participating lenders offer places under the scheme.

Under the scheme, first home buyers can build or purchase a new home, including newly-constructed dwellings, off-the-plan dwellings, house and land packages, land and a separate contract to build a new home, and can be used in conjunction with other schemes and concessions for first home buyers. Conditions and timeframes apply.

Media release – Update from the Australian Government: Family Home Guarantee

Media release – Improving opportunities for home ownership

FHLDS eligibility

First home saver scheme cap increase

Date of effect Start of the first financial year after Royal Assent of the enabling legislationExpected to be 1 July 2022

The first home super saver (FHSS) scheme allows you to save money for your first home inside your super fund, enabling you to save faster by accessing the concessional tax treatment of superannuation. You can make voluntary concessional (before-tax) and voluntary non-concessional (after-tax) contributions into your super fund and then apply to release those funds.

Currently under the scheme, participants can release up to $15,000 of the voluntary contributions (and earnings) they have made in a financial year up to a total of $30,000 across all years.

The Government has announced that the current maximum releasable amount of $30,000 will increase to $50,000.

The voluntary contributions made to superannuation are assessed under the applicable contribution caps; there is no separate cap for these amounts.

Amounts withdrawn will be taxed at marginal rates less a 30% offset. Non-concessional contributions made to the FHSS are not taxed. 

To be eligible for the scheme, you must be 18 years of age or over, never owned property in Australia, and have not previously applied to release superannuation amounts under the scheme. Eligibility is assessed on an individual basis. This means that couples, siblings or friends can each access their own eligible FHSS contributions to purchase the same property.

Media release – Improving opportunities for home ownership

JobTrainer extended

The Government has committed an additional $500 million to extend the JobTrainer Fund by a further 163,000 places and extend the program until 31 December 2022.  JobTrainer is matched by state and territory governments and provides job seekers, school leavers and young people access to free or low-fee training places in areas of skills shortages.

Full tax exemption for ADF personnel – operation Paladin

Date of effect 1 July 2020

The Government will provide a full income tax exemption for the pay and allowances of Australian Defence Force (ADF) personnel deployed to Operation Paladin. Operation Paladin is Australia’s contribution to the United Nations Truce Supervision Organisation, with ADF personnel deployed in Israel, Jordan, Syria, Lebanon and Egypt.

Your superannuation

Work test repealed for voluntary superannuation contributions

Date of effectThe first financial year after Royal Assent of the enabling legislation. Expected to be 1 July 2022

Individuals aged 67 to 74 years will be able to make or receive non-concessional or salary sacrifice superannuation contributions without meeting the work test. The contributions are subject to existing contribution caps and include contributions under the bring-forward rule.

Currently, the ‘work test’ requires individuals aged 67 to 74 years to work at least 40 hours over a 30 day period in a financial year to be able to make voluntary contributions (both concessional and non-concessional) to their superannuation, or receive contributions from their spouse.

Personal concessional contributions will remain subject to the ‘work test’ for those aged between 67-74.

Expanded access to ‘downsizer’ contributions from sale of family home

Date of effectThe first financial year after Royal Assent of the enabling legislation. Expected to be 1 July 2022

The eligibility age to access downsizer contributions will decrease from 65 years of age to 60.

Currently, downsizer contributions enable those over the age of 65 to contribute $300,000 from the proceeds of selling their home to their superannuation fund. These contributions are excluded from the existing age test, work test and the $1.7 million transfer balance threshold (but will not be exempt from your transfer balance cap).

Both members of a couple can take advantage of the concession for the same home. That is, if a couple have joint ownership of a property and meet the other criteria, both people can contribute up to $300,000 ($600,000 per couple).

Downsizer contributions apply to sales of a principal residence owned for the past ten or more years.

Sale proceeds contributed to superannuation under this measure will count towards the Age Pension assets test.

SMSF residency tests relaxed

Date of effectThe first financial year after Royal Assent of the enabling legislation. Expected to be 1 July 2022

The residency rules for Self Managed Superannuation Funds (SMSFs) and small APRA regulated funds (SAFs) will be relaxed by extending the central control and management test safe harbour from two to five years for SMSFs, and removing the active member test for both fund types. 

This change will enable SMSF and SAF members to contribute to their super while temporarily overseas, (as members of large APRA-regulated funds can do).

An SMSF must be considered an Australian Superannuation Fund in order to be a complying superannuation fund and receive tax concessions. If a super fund fails to meet the definition of an Australian Superannuation Fund then it is likely to become a non-complying, if this occurs the fund’s assets and income are taxed at the highest marginal tax rate.

This measure will enable SMSF and SAF members to keep and continue to contribute to their fund while predominantly undertaking overseas work and education opportunities.

SMSF legacy product conversions

Date of effectThe first financial year after Royal Assent of the enabling legislation

Individuals will be able to exit a specified range of legacy retirement products, together with any associated reserves, for a two-year period. This includes market-linked, life-expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual’s contribution caps.

The measure will permit full access to all of the product’s underlying capital, including any reserves, and allow individuals to potentially shift to more contemporary retirement products.

This will be a voluntary measure and not a mandated requirement for those individuals who hold these legacy accounts.

Social security and taxation treatment will not be grandfathered for any new products commenced with commuted funds and the commuted reserves will be taxed as an assessable contribution.

Early release of super scheme for victims of domestic violence not proceeding

The Government is not proceeding with the measure to extend early release of superannuation to victims of family and domestic violence.

Technical changes to First Home Super Saver Scheme

Technical changes will be made to the First Home Super Saver Scheme to reduce errors and streamline applications. These include:

  • Increasing the discretion of the Commissioner of Taxation to amend and revoke FHSSS applications
  • Allowing individuals to withdraw or amend their applications prior to receiving an FHSSS amount, and allow those who withdraw to re-apply for FHSSS releases in the future
  • Allowing the Commissioner of Taxation to return any released FHSSS money to superannuation funds, provided that the money has not yet been released to the individual
  • Clarifying that the money returned by the Commissioner of Taxation to superannuation funds is treated as funds’ non-assessable non-exempt income and does not count towards the individual’s contribution caps.

Business & employers

Temporary full expensing extension

Date of effectAssets acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023

Businesses with an aggregated turnover of less than $5 billion will be able to continue to fully expense the cost of new depreciable assets and the cost of improvements to existing eligible assets in the first year of use. Introduced in the 2020-21 Budget, this measure will enable an asset’s cost to continue to be fully deductible upfront rather than being claimed over the asset’s life, regardless of the cost of the asset. The extension means that the rules can apply to assets that are first used or installed ready for use by 30 June 2023.

Certain expenditure is excluded from this measure, such as improvements to land or buildings that are not treated as plant or as separate depreciating assets in their own right. Expenditure on these improvements would still normally be claimed at 2.5% or 4% per year.

The car limit will continue to place a cap on the deductions that can be claimed for luxury cars.

From 1 July 2023, normal depreciation arrangements will apply and the instant asset write-off threshold for small businesses with turnover of less than $10 million will revert back to $1,000.

Second-hand assets

For businesses with an aggregated turnover under $50 million, full expensing also applies to second-hand assets.

Small business pooling

Small business entities (with aggregated annual turnover of less than $10 million) using the simplified depreciation rules can deduct the full balance of their simplified depreciation pool at the end of the income year while full expensing applies. The provisions which prevent small businesses from re-entering the simplified depreciation regime for five years if they voluntarily leave the system will presumably continue to be suspended.

Opt-out rules

Taxpayers can choose not to apply the temporary full expensing rules to specific assets, although this choice is not currently available to small business entities that choose to apply the simplified depreciation rules for the relevant income year.

Temporary loss-carry back extension

Date of effectLosses from the 2019-20, 2020-21, 2021-22 or 2022-23 income years

Companies with an aggregated turnover of less than $5 billion will be able to carry back losses from the 2019-20, 2020-21, 2021-22 and 2022-23 income years to offset previously taxed profits in the 2018-19, 2019-20, 2020-21 and 2021-22 income years.

Under this measure tax losses can be applied against taxed profits in a previous year, generating a refundable tax offset in the year in which the loss is made. The amount carried back can be no more than the earlier taxed profits, limiting the refund by the company’s tax liabilities in the profit years. Further, the carry back cannot generate a franking account deficit meaning that the refund is further limited by the company’s franking account balance.

The tax refund will be available on election by eligible businesses when they lodge their 2020-21, 2021-22 and 2022-23 tax returns.

Before the measure was introduced in the 2020-21 Budget, companies were required to carry losses forward to offset profits in future years. Companies that do not elect to carry back losses can still carry losses forward as normal.

This measure will interact with the Government’s announcement to extend full expensing of investments in depreciating assets for another year. The new investment will generate significant tax losses in some cases which can then be carried back to generate cash refunds for eligible companies.

Residency tests rewrite

Date of effectThe first income year after the date of Royal Assent of the enabling legislation.

Determining whether an individual is a resident of Australia for tax purposes can be complex. The current residency tests for tax purposes can create uncertainty and are often subject to legal action. 

The Government will replace the individual tax residency rules with a new, modernised framework. The primary test will be a simple ‘bright line’ test – a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident. Individuals who do not meet the primary test will be subject to secondary tests that depend on a combination of physical presence and measurable, objective criteria.

The modernisation of the residency framework is based on the Board of Taxation’s 2019 report Reforming individual tax residency rules – a model for modernisation.

Employee share scheme simplification

Date of effectESS interests issued from the first income year after Royal Assent of the enabling legislation

Employee share schemes provide an opportunity for employers to offer employees a stake in the growth of the company by issuing interests such as shares, rights (including options) or other financial products to their employees, usually at a discount.

The Government has moved to simplify employee share schemes and make them more attractive by removing the cessation of employment taxing point for tax-deferred Employee Share Schemes (ESS). Currently, when an employee receives shares or options that are subject to deferred taxation the taxing point is triggered when they cease employment with the company, even if they could still lose the shares or options in future or have not yet exercised the options they have received.

This will mean that under a tax-deferred ESS, where certain criteria are met, employees may continue to defer the taxing point even if they are no longer employed by the company. In broad terms, following this change the deferred taxing point will be the earliest of:

  • in the case of shares, when there is no risk of forfeiture and no restrictions on disposal
  • in the case of options, when the employee exercises the option and there is no risk of forfeiting the resulting shares and no restriction on disposal
  • the maximum period of deferral of 15 years.

Regulatory changes will also be made to reduce red tape where employers do not charge or lend to the employees to whom they offer ESS. Where employers do charge or lend, streamlining requirements will apply for unlisted companies making ESS offers that are valued at up to $30,000 per employee per year.

Fact sheet – Tax incentives to support the recovery

$450 per month threshold for super guarantee eligibility removed

Date of effectThe first financial year after Royal Assent of the enabling legislation. Expected to be 1 July 2022

Currently, employees need to earn $450 per month to be eligible to be paid the superannuation guarantee. This threshold will be removed so all employees will be paid super guarantee regardless of their income earned.

The Retirement Income Review estimated that around 300,000 individuals would receive additional superannuation guarantee payments each month once the threshold is removed.

Medical and biotech ‘patent box’ tax regime

Date of effect1 July 2022

Income derived from Australian medical and biotechnology patents will be taxed at a concessional effective corporate tax rate of 17% from 1 July 2022 under a new $206m ‘patent box’ tax regime.

Only granted patents, which were applied for after the Budget announcement, will be eligible and development will need to be domestic. That is, the patent box rewards companies to keep their IP within Australia. The preferential tax rate applies to income due to the patent and not from manufacturing, branding or other attributes.

The patent box concept is new to Australia but exists in twenty or so other countries including the UK and France. The Government will follow the OECD’s guidelines on patent boxes to ensure the patent box meets internationally accepted standards, and will consult with the industry on the design.

If effective, this same concept may also be applied to the clean energy sector.

Fact sheet – Tax incentives to support the recovery

Tax & investment incentives for the digital economy

Previously announced

As part of its Digital Economy Strategy package, the Government has committed to new and expanded funding to invest in the growth of digital industries and the adoption of digital technologies by small business.

Investment and tax incentives

The Government has committed to a series of tax incentives to support digital technologies:

Digital games tax offset

A 30% refundable tax offset for eligible businesses that spend a minimum of $500,000 on qualifying Australian games expenditure. The Digital Games Tax Offset will be available from 1 July 2022 to Australian resident companies or foreign resident companies with a permanent establishment in Australia. Industry consultation will commence in mid 2021 to establish the eligibility criteria and definition of qualifying expenditure.

 Self-assessment of the effective life of certain intangible assets

The income tax laws will be amended to allow taxpayers to self-assess the effective life of certain intangible assets, rather than being required to use the effective life currently prescribed by statute. The measure applies to assets acquired from 1 July 2023 (after the temporary full expensing regime has concluded) including patents, registered designs, copyrights and in-house software for tax purposes. Taxpayers will be able to bring deductions forward if they self-assess the assets as having a shorter effective life to the statutory life.

 Review of venture capital tax incentives

The effectiveness of the existing range of tax incentives designed to attract foreign investment and encourage venture capitalists to invest in early-stage Australian companies will be reviewed to ensure they are producing the intended results. This is code for the Government doesn’t think the money invested is achieving a genuine result and changes are likely to be recommended.

Australia’s digital economy – investment incentives fact sheet

Media release – A modern digital economy to secure Australia’s future

Emerging aviation technologies

The Government has committed $35.7m to support emerging aviation technologies, the bulk of which is committed to the Emerging Aviation Technology Partnerships (EATP) program. Partnering with industry, the program is focussed on:

  • growing manufacturing jobs in electric aviation
  • connecting regional communities
  • digital farming
  • boosting regional supply chains
  • improving health outcomes for remote Indigenous communities.

and is expected to include electric engines, drones and electric vertical take-off and landing aircraft.

Applications for EATP partners will be sought from local and international industry through a competitive application process in late 2021.

Artificial intelligence development

A package of measures to oversee and develop Australia’s use and integration of artificial intelligence (AI) including:

National AI centre

A new national AI centre to create the foundation for Australia’s AI and digital ecosystem within the CSIRO’s Data61. The centre will support projects that lift AI capability, provide a “front door” or SMEs looking for talent, and provide a central coordination for strategically aligned AI projects. Four Digital Capability Centres will be appointed through a competitive process focussing on specific applications of AI, such as robotics or AI assisted manufacturing. These Centres will provide SMEs with connections to AI equipment, tools and research, access to advice and training to help SMEs confidently adopt AI technologies, and links with the required AI expertise to identify business needs and connect them to leading researchers.

AI grant funding

Two grant funding programs (one national and one specifically for regional initiatives) for business to pilot AI projects that address key national challenges. Grantees will retain the intellectual property of their solution.

Media release – A modern digital economy to secure Australia’s future

Artificial intelligence

Expansion of small business digital support services

The Government has committed to:

  • A further $12.7m for the Digital Solutions – Australian Small Business Advisory Services Program that provides small businesses with access to digital solutions advisers to work with them to expand their use of digital technology. The Digital Solutions Program will pilot a program for the not-for-profit sector.
  • $15.3 m has been dedicated to drive electronic invoicing through the business community by working with payment providers, supply chain pilots, and education campaigns (E-invoicing will be mandatory for Government by July 2022). No direct incentives for adoption.

Media release – A modern digital economy to secure Australia’s future

SME Digitalisation

Investments in new technologies to reduce emissions

Previously announced

Date of effectFrom 2021-22

The Government will provide $1.6 billion over ten years from 2021-22 (including $761.9 million over four years from 2021-22) to incentivise private investment in technologies identified in the Government’s Technology Investment Roadmap and Low Emissions Technology Statements. Funding includes:

  • Creation of a technology co-investment facility that supports the development of regional hydrogen hubs, carbon capture, use and storage technologies, very low cost soil carbon measurement and new agricultural feed technologies, a high-integrity carbon offset scheme in the Indo-Pacific region, and support the implementation of the Technology Investment Roadmap and Low Emissions Technology Statements
  • Establish the below baseline crediting mechanism recommended by the King Review and help realise abatement opportunities in large industrial facilities
  • Support for Australian businesses and supply chains to reduce their energy costs and improve productivity through the uptake of more energy efficient industrial equipment and business practices
  • Early stage seed capital financing function within the Australian Renewable Energy Agency (ARENA).

Media Release – Jobs Boost From New Emissions Reduction Projects

Media Release – Cutting Emissions And Creating Jobs With International Partnerships

Tax residency rules for trusts and limited partnerships

In the 2020-21 Budget, the Government announced that the corporate tax residency rules would be amended to address the uncertainty that currently exists when trying to determine the residency status of a company that has been incorporated overseas.

These amendments have not yet been made, but the Government has announced that it will also consult on broadening the scope of the amendments to trusts and corporate limited partnerships as part of the consultation process dealing with the company residency rules.

Junior Minerals exploration tax incentive extended

The Junior Minerals Exploration Incentive program provides a tax incentive for investment in junior minerals exploration companies raising capital to fund greenfields exploration activity.

Eligible companies are able to create exploration credits by giving up a portion of their tax losses relating to exploration expenditure, which can then be distributed to new investors as a refundable tax offset or a franking credit.

The program has been extended for four years from 1 July 2021 to 30 June 2025.

The Government will also make minor legislative amendments to allow unused exploration credits to be redistributed a year earlier than under current settings.

Tax relief for brewers and distillers – annual cap increased to $350k

Previously announced

Date of effect1 July 2021

From 1 July 2021, eligible brewers and distillers will be able to receive a full remission of any excise they pay, up to an annual cap of $350,000. Currently, eligible brewers and distillers are entitled to a refund of 60% of the excise they pay, up to an annual cap of $100,000.

The tax relief will align the benefit available under the Excise Refund Scheme for brewers and distillers with the Wine Equalisation Tax (WET) Producer Rebate.

Media release – Tax relief for small brewers and distillers to support jobs

Tax exemption for storm and flood grants for SMEs and primary producers

Date of effectGrants relating to storm and flood events between 19 February and 31 March 2021

Qualifying grants made to primary producers and small businesses affected by the storms and floods will be non-assessable non-exempt income for tax purposes.

Qualifying grants are Category D grants provided under the Disaster Recovery Funding Arrangements 2018, where those grants relate to the storms and floods in Australia that occurred due to rainfall events between 19 February 2021 and 31 March 2021. These include small business recovery grants of up to $50,000 and primary producer recovery grants of up to $75,000.

Student visa holders working in key sectors

Student visa holders will temporarily be able to work more than 40 hours per fortnight in key sectors:

  • Tourism and hospitality – student visa holders will be able to work more than 40 hours per fortnight, as long as they are employed in the tourism or hospitality sectors.
  • Agricultural sector – From 5 January 2021, work limitation conditions placed on student visa holders were temporarily lifted to allow these visa holders to work more than 40 hours per fortnight if they are employed in the agriculture sector. The Government has removed the requirement for applicants for the Temporary Activity visa (subclass 408) to demonstrate their attempts to depart Australia if they intend to undertake agricultural work. The period in which a temporary visa holder can apply for the Temporary Activity visa has also been extended from 28 days prior to visa expiry to 90 days prior to visa expiry.

Support for tertiary and international education providers

Date of effectFrom 2021-22

The Government is implementing a series of measures to assist tertiary and international education providers to help mitigate some of the impact of COVID-19. Funding includes:

  • $26.1 million over four years from 2021-22 to assist non-university higher education providers to attract more domestic students through offering 5,000 additional short course places in 2021
  • $9.4 million in 2021-22 to provide grants of up to $150,000 to eligible higher education and English language providers to support innovative online and offshore education delivery models
  • extending existing FEE-HELP loan fee exemption by six months to 31 December 2021

A range of Government fees and regulatory charges have also been either revised or postponed.

Extending supports for the arts sector

Previously announced

The Government will provide $222.9 million over two years from 2020-21 to continue to support the arts sector through the impacts of COVID-19.

Funding includes:

  • Expansion of the Restart Investment to Sustain and Expand Fund to provide financial support to support events or productions
  • Extension of the Temporary Interruption Fund for 2021-22
  • A program of support for independent cinemas

Producer Tax Offset rate holds at 40% for 2020-21

The Producer Tax Offset rate will stay at 40% for feature films with a theatrical release. The 2020-21 Budget had intended to reduce the rate to 30%.

Heavy road vehicle charge increase

Date of effect1 July 2021

The Heavy Vehicle Road User Charge will increase from 25.8 cents per litre to 26.4 cents per litre from 1 July 2021.

New avenue for small business to ‘pause’ ATO debt recovery

Previously announced

Date of effectDate of Royal Assent of the enabling legislation

Small businesses with an aggregated turnover of less than $10 million per year will be able to apply to the  Small Business Taxation Division of the Administrative Appeals Tribunal (AAT) to pause or modify ATO debt recovery action until their underlying case is decided.

Currently, small business can only pause ATO debt recovery action in the courts. This new avenue will enable a small business to pause ATO debt recovery until their case has been heard by the AAT.

Media release – Making it easier for small business to pause debt recovery action

Early engagement process for foreign businesses

Date of effect1 July 2021

The ATO will introduce a new early engagement service specifically aimed at foreign businesses that are looking to invest in Australia. The service aims to provide confidence to foreign investors on how the Australian tax laws will apply and will be tailored to specific investors. It is envisaged that the ATO’s service will accommodation specific project timeframes and provide access to expedited private rulings.

Automotive R&D tariff concession extended

Date of effect1 April 2021

The automotive research and development tariff concession will be extended for a further four years until 30 June 2025. Companies registered under the Automotive Transformation Scheme Act 2009 as at 31 December 2020 will continue to be able to claim a tariff concession of up to 5% on the value of imports used for automotive research and development in Australia.

183-day test modified for NZ sportspeople and support staff

Date of effect2020-21 and 2021-22 income and FBT years

COVID-19 has meant that a number of New Zealand sportspeople and teams have been based in Australia for an extended period of time. Under the 183 day test in the double tax agreement between Australia and New Zealand, these sportspeople and support staff could be exposed to tax in Australia. The Government will ensure New Zealand maintains its primary taxing right in relation to sporting teams and support staff who are located in Australia for league competitions because of COVID-19.

Further insolvency reforms

The Government has announced that it will further streamline insolvency laws:

  • Review of trusts – Review how trusts (a common vehicle for SME businesses) are treated under insolvency laws.
  • Review future of safe harbour trading provisions – introduced in 2017, the safe harbour trading provisions provided breathing space for distressed businesses to trade out of debt. These rules will be reviewed to determine if they remain fit for purpose.
  • Review of schemes of arrangement – introduction of a moratorium on creditor enforcement while schemes are being negotiated.
  • Increase in statutory demand threshold – the threshold at which creditors can issue a statutory demand on a company will increase from $2,000 to $4,000.

Media release – Further insolvency reforms to support business dynamism

Additional international information exchange countries

From 1 January 2022, the list of jurisdictions that have an effective information sharing agreement with Australia will be updated to include Armenia, Cabo Verde, Kenya, Mongolia, Montenegro and Oman.

Residents of listed jurisdictions are eligible to access the reduced Managed Investment Trust (MIT) withholding tax rate of 15% on certain distributions, instead of the default rate of 30%.

Education, skills & training

Apprenticeship scheme uncapped

Boosting Apprenticeship Commencements provides a 50% wage subsidy to employers and Group Training Organisations to take on new apprentices and trainees. The measure will  uncap the number of eligible places and increase the duration of the 50% wage subsidy to 12 months from the date an apprentice or trainee commences with their employer.

From 5 October 2020 to 31 March 2022, businesses of any size can claim the Boosting Apprenticeship Commencements wage subsidy for new apprentices or trainees who commence during this period. Eligible businesses will be reimbursed up to 50% of an apprentice or trainee’s wages of up to $7,000 per quarter for 12 months.

Media release – Thousands Of New Apprentice And Trainee Jobs

Boosting Apprenticeship Commencements

Digital skills training

Previously announced

As part of its Digital Economy Strategy package, the Government has committed to $100m in funding to support digital skills development including:

  • Digital Skills Cadetship Trials – working with industry, the Government will trial 4 to 6 month cadetships for digital careers comprising formal training with on-the-job learning.
  • Expansion of Cyber Security Skills Partnership Innovation Fund – Additional funding for education providers that improve the quality or availability of cyber security professionals in Australia.
  • Next Generation Graduates Programs – AI & next gen technologies – a competitive national scholarship program cofounded with universities and industry:
  • the Next Generation Artificial Intelligence Graduates Program to attract and train up to 234 home-grown, job-ready AI specialists through competitive national scholarships
  • the Next Generation Emerging Technology Graduates Program to attract and train up to an additional 234 home-grown, job-ready specialists in other emerging technologies, such as robotics, cyber security, quantum computing, blockchain and data through competitive national scholarships.

Media release – A modern digital economy to secure Australia’s future

Government & regulators

New compliance requirements for NFP income tax exemptions

Date of effect1 July 2023

The Government will invest $1.9m for the ATO to build an online system to enhance the transparency of income tax exemptions claimed by not-for-profit entities (NFPs).

Currently non-charitable NFPs can self-assess their eligibility for income tax exemptions, without an obligation to report to the ATO. From 1 July 2023, the ATO will require income tax exempt NFPs with an active Australian Business Number (ABN) to submit online annual self-review forms with the information they ordinarily use to self-assess their eligibility for the exemption. This measure will ensure that only eligible NFPs are accessing income tax exemptions.

Government, the digital economy and digital security

Previously announced

As part of its Digital Economy Strategy package, the Government has committed to invest in the frameworks and infrastructure to strength the security of data, manage consumer rights, and enhance the Government’s interaction.

  • Networks and cybersecurity – over $50m has been committed to strengthen the rollout of 5G and 6G mobile networks, develop a National Data Security Action Plan, improve the resilience of Government infrastructure using Cyber Hubs, and $16.4m to improve mobile connectivity in bushfire peri-urban prone areas.
  • $500m on myGov and My Health Record – the Government will overhaul myGov – now the primary access point for Government services, and My Health Record – adding support for COVID-19 testing and vaccinations, connecting Residential Aged Care Facilities and connecting specialists in private practice and delivering improved telehealth, emerging virtual healthcare initiatives and digitised support across all stages of healthcare.
  • Data security and rights – $113m to delivering Australia’s first data strategy to bring data management and regulation up to speed with technology, expansion of data rights to energy industry (launched in banking in 2021), and the development of a 3D Australian ‘digital atlas’.

Media release – A modern digital economy to secure Australia’s future

Cyber security, safety and trust

Enhancing Government service delivery

Data and the digital economy

$850m to protect and develop farming

Previously released

A package of measures is aimed at protecting and enhancing the farming sector, much of it focussed on biosecurity and stewardship. Specific initiatives relate to African Swine Fever and the Khapra Beetle, but much of the package is in the development of biosecurity diagnostic tools and analytics across multiple contact points – cargo, international mail, air travellers, container cargo.

Measures include:

  • $400.1 million to strengthen biosecurity;
  • $32.1 million to extend opportunities to reward farmers for the stewardship of their land;
  • $29.8 million to grow the agricultural workforce;
  • $15.0 million to improve trade and market access; and
  • $129.8 million to deliver a National Soils Strategy.

Media release – Budget securing Australia’s recovery with better deal for farmers

Media Release – Biosecurity for a safe Australia and thriving farming sector

Gas fired recovery

The Government has committed to $58.6 million to support key gas infrastructure projects and unlock new gas supply.

COVID-19 vaccine response

The Government will provide $1.9 billion over five years from 2020-21 to distribute and administer COVID-19 vaccines to residents of Australia.

Women’s safety

The Government has committed $998.1 million over four years for initiatives to reduce, and support the victims of Family, Domestic and Sexual Violence (FDSV) against women and children. Initiatives include a new National Partnership with the states and territories to expand the funding of frontline FDSV support Services, $5,000 grants for women fleeing domestic violence, programs to support refugee and migrant women, programs to support Aboriginal and Torres Strait Islander women and children who have experienced or are experiencing family violence, along with a range of prevention campaigns.

Funding has also been provided for vulnerable women and children accessing the legal system and family support services.

Response to aged care

As previously announced, the Government has committed a $17.7 billion whole-of-government response to the recommendations of the Royal Commission into Aged Care Quality and Safety to improve safety and quality and the availability of aged care services. This includes:

  • $6.5 billion will be spent over four years to release 80,000 additional home care packages over two years from 2021-22 – bringing the total number to 275,598 by June 2023.
  • Just under $700 million to improve access and infrastructure
  • $783 million to provide greater access to respite care services and payments to support carers
  • $272.5 million for dedicated face to face support services to navigate the aged care system
  • $365.7 million to support health care within aged care facilities
  • $200 million for a new rating system of aged care providers
  • $3.9 billion to increase front line care
  • $3.2 billion to support aged care providers through a new Government-funded Basic Daily Fee supplement of $10 per resident per day, while continuing the 30% increase in the homelessness and viability supplements
  • $216.7 million to upskill the workforce and enhance nurse leadership and clinical skills through additional nursing scholarships and places in the Aged Care Transition to Practice Program

Mental health and suicide prevention

The $2 billion National Mental Health and Suicide Prevention Plan funds a range of initiatives including the enhancement and expansion of digital mental health services, universal aftercare for those who have made a suicide attempt, and a network of Head of Health adult mental health centres and satellites to provide coordinated multi-disciplinary care.

Royal Commission into defence and veteran suicide

The Government has committed to $174.2 million over two years from 2021-22 for a Royal Commission into Defence and Veteran Suicide.

National Recovery and Resilience Agency established

A new national agency, the National Recovery and Resilience Agency will be created to support local communities during the relief and recovery phases following major disasters, and provide advice on policies and programs to mitigate the impact of future major disaster events. $600m will be invested in a new program of disaster preparation and mitigation, managed by the new agency.

Media Release – Helping Communities Rebuild And Recover From Natural Disasters

Other

Roads & building projects

‘Shovel ready’ projects are high on the Government’s agenda.

New South Wales

Key projects to be funded include:

  • Roads
  • $2.03 billion for the Great Western Highway Upgrade – Katoomba to Lithgow – Construction of East and West Sections
  • $400 million for the Princes Highway Corridor – Jervis Bay Road to Sussex Inlet Road – Stage 1
  • $240 million for the Mount Ousley Interchange
  • $100 million for the Princes Highway Corridor – Jervis Bay Road Intersection
  • $87.5 million for M5 Motorway – Moorebank Avenue-Hume Highway Intersection Upgrade
  • $52.8 million for Manns Road – Intersection Upgrades at Narara Creek Road and Stockyard Place; and
  • $48 million for Pacific Highway – Harrington Road Intersection Upgrade, Coopernook.
  • Infrastructure
  • $66 million – Newcastle airport upgrade to widen the runway to accommodate longer range domestic and international passenger services. The upgrade is expected to complete in 2023. More.

Victoria

Key projects to be funded include:

  • $2 billion for initial investment in a new Melbourne Intermodal Terminal;
  • An additional $307 million for the Pakenham Roads Upgrade;
  • An additional $203.4 million for the Monash Roads Upgrade;
  • An additional $20 million for the Green Triangle and $15 million for the Melbourne to Mildura Roads of Strategic Importance corridors;
  • An additional $56.8 million for the Hall Road Upgrade;
  • An additional $30.4 million for the Western Port Highway Upgrade;
  • $17.5 million for the Dairy Supply Chain Road Upgrades; and
  • $10 million for the Mallacoota-Genoa Road Upgrade.

Queensland

Key projects to be funded include:

  • $400 million for the Inland Freight Route (Mungindi to Charters Towers) Upgrades
  • An additional $400 million for Bruce Highway Upgrades
  • $240 million for the Cairns Western Arterial Road Duplication
  • $178.1 million for the Gold Coast Rail Line Capacity Improvement (Kuraby to Beenleigh) – Preconstruction
  • $160 million for the Mooloolah River Interchange Upgrade (Packages 1 and 2)
  • An additional $126.6 million for Gold Coast Light Rail – Stage 3
  • $35.3 million for the Maryborough-Hervey Bay Road and Pialba-Burrum Heads Road Intersection Upgrade; and
  • $10 million for the Caboolture – Bribie Island Road (Hickey Road-King John Creek) Upgrade.

Northern Territory

New projects to be funded include:

  • $300k Development Study for a Proposed Tennant Creek Multimodal Facility and Rail Terminal
  • $150m Northern Territory National Network Highway Upgrades (Phase 2)
  • $173.6m Northern Territory Gas Industry Roads Upgrades

South Australia

Key projects to be funded include:

  • $2.6 billion allocation of funding for the North-South Corridor – Darlington to Anzac Highway;
  • $161.6 million for the Truro Bypass;
  • $148 million for the Augusta Highway Duplication Stage 2;
  • An additional $64 million for the Strzelecki Track Upgrade – Sealing;
  • An additional $60 million for the Gawler Rail Line Electrification;
  • $48 million for the Heysen Tunnel Refit and Upgrade – Stage 2
  • An additional $27.6 million for the Overpass at Port Wakefield and Township Duplication;
  • $32 million for the Kangaroo Island Road Safety and Bushfire Resilience Package, and
  • $22.5 million for the Marion Road and Sir Donald Bradman Drive Intersection Upgrade

Tasmania

Key projects to be funded include:

  • $80 million for the Tasmanian Roads Package – Bass Highway Safety and Freight Efficiency Upgrades Package – Future Priorities;
  • $48 million for the Algona Road Grade Separated Interchange and Duplication of the Kingston Bypass;
  • $44 million for the Rokeby Road – South Arm Road Upgrades;
  • $37.8 million for the Midland Highway Upgrade – Campbell Town North (Campbell Town to Epping Forest);
  • $36.4 million for the Midland Highway Upgrade – Oatlands (Jericho to South of York Plains);
  • $35.7 million for the Midland Highway Upgrade – Ross (Mona Vale Road to Campbell Town);
  • An additional $24 million for the Port of Burnie Shiploader Upgrade; and
  • $13.2 million for the Huon Link Road.

ACT

New projects to be funded include:

  • $2.5m Beltana Road Improvements
  • $132.5m Canberra Light Rail – Stage 2A
  • $26.5m William Hovell Drive Duplication

The economy

In his Budget speech, the Treasurer stated “Australia is coming back” with unemployment lower than pre pandemic levels (5.6%).

The deficit, thanks in part to surging iron ore prices, is lower than anticipated in the 2020-21 Federal Budget at $161 billion in 2020-21, a $52.7 billion improvement to estimates. The underlying cash balance is expected to be a deficit of $106.6 billion in 2021-22 and continue to improve over the forward estimates to a deficit of $57 billion in 2024-25.  While the deficit is large, it did its job.

Real GDP grew strongly over the latter half of 2020, marking the first time on record when Australia has experienced two consecutive quarters of economic growth above 3% – output is expected to have exceeded its pre-pandemic level in the March quarter of 2021.  Real GDP is forecast to grow by 1.25% in 2020-21, by 4.25% in 2021-22 and 2.5% in 2022-23. After falling by 2.5% in 2020, real GDP is expected to grow by 5.25% in 2021, and by 2.75% in 2022.

Economic Performance Graphs

Key budget assumptions

A population-wide vaccination program is likely to be in place by the end of 2021.

  • During 2021, localised outbreaks of COVID-19 are assumed to occur but are effectively contained.
  • General social distancing restrictions and hygiene practices will continue until medical advice recommends removing them.
  • No extended or sustained state border restrictions in place over the forecast period.
  • A gradual return of temporary and permanent migrants from mid-2022. Small phased programs for international students will commence in late 2021 and gradually increase from 2022. The rate of international arrivals will continue to be constrained by state and territory quarantine caps over 2021 and the first half of 2022, with the exception of passengers from Safe Travel Zones.
  • Inbound and outbound international travel is expected to remain low through to mid-2022, after which a gradual recovery in international tourism is assumed to occur.

Revenue: Where 2021-22 Budget revenue comes from

Budget Revenue

Expenditure: How the 2021-22 Budget is spent

Budget Expenditure

Source: Budget 2021-22

Businesses with an aggregated annual turnover between $10 million and $50 million will have access to up to ten small business tax concessions.

The changes are estimated to support an additional 20,000 businesses and their employees according to a joint press release from the Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar.

The original press release can be found here: Expanding Access to Small Business Tax Concessions

How the updated small business tax concessions will be rolled out

The expanded concessions, as part of the 2020-21 Budget will apply in three phases:

  • From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
  • From 1 April 2021, eligible businesses will be exempt from the 47 per cent fringe benefits tax on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees.
  • From 1 July 2021, eligible businesses will be able to access the simplified trading stock rules, remit pay as you go (PAYG) instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods. Eligible businesses will also have a two- year amendment period apply to income tax assessments for income years starting from 1 July 2021.

In addition, from 1 July 2021, the Commissioner of Taxation’s power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50 million aggregated annual turnover threshold.

What types of concessions will be available?

More details will be made available as further information is released on these measures, however it’s likely to align the the existing small business tax concessions including:

  • Simplified depreciation and the instant asset write-off;
  • Accelerated depreciation;
  • Deductions for professional expenses for start-ups;
  • Small business restructure rollovers;
  • Simplified trading stock rules;
  • Immediate deduction for prepaid expenses;
  • Two-year amendment periods;
  • Increased small business income tax offset;
  • PAYG instalment concessions;
  • Simplified BAS

If you have any questions regarding this announcement and opportunities it may provide to assist your business, please get in touch with the Quill Accounting Team.

As part of the State Government budget announcements, Treasurer Cameron Dick this week announced Queensland payroll tax refunds for eligible businesses for the months of July and August 2020.

The refunds of payroll tax do not have to be repaid (they are not a deferral).

Eligibility for Queensland payroll tax refunds

Businesses will be eligible for the Queensland payroll tax refunds where they are an employer (or part of a group of employers) who pay $6.5m or less in Australian taxable wages in a financial year and who are registered for payroll tax.

Importantly, JobKeeper payments are not included in Australian taxable wages. JobKeeper payments are exempt from payroll tax.

Employers who meet this criteria can apply for the refunds for the amount of payroll tax paid or payable for the months of July and August 2020.

How to apply for payroll tax refunds

Eligible business can apply online for the payroll tax refunds via the Queensland Office of State Revenue:

Apply ONLINE

Applications for payroll tax refunds must be made by 30 October 2020.

If your business has not yet paid its payroll tax liability for the months of July and August 2020, they will not need to be paid. However, in order to receive the benefit of the relief, you need to lodge your return for the relevant period. 

The following information if required for the online application:

  • Business Name
  • Australian Business Number (ABN)
  • Payroll Tax Client Number*
  • Contact Email Address
  • Contact Phone Number
  • Contact Name

*7-digit client number of the taxpayer. You can find the taxpayer name and client number in the top-left corner of OSR Online.

It’s important that the information provided in the application is accurate. The Office of State Revenue may audit your eligibility to the refund and if you’re deemed not be eligible, you will have to repay the refund and interest and penalties may apply.

Payroll tax lodgement periods

How and when the payroll tax refunds are paid, or applied to your businesses payroll tax liability depends on how frequently you lodge.

 

Lodgement CycleHow Refund Applied
MonthlyIf return for the applicable monthly has been lodged, refund will be paid. If you’ve not lodged the return yet, complete the Online Refund Application first, then lodge your return. Refund will be applied in the calculation (no requirement to pay monthly liability).
Half-yearly or QuarterlyComplete the Online Refund Application. A pro-rata refund will be applied in the calculation.
Annual

The following steps need to be followed:

  1. Complete the online refund application form.
  2. Send an email to payrolltax@treasury.qld.gov.au to change your lodgement frequency from annual to half-yearly.
  3. Wait for an email that confirms when to lodge your half-yearly return.
  4. A pro-rata refund will be applied in the calculation of the half-yearly return. OSR will contact you if they need to change you back to lodging once a year.

 

Payroll tax deferrals

As previously announced, payroll tax deferrals are available for eligible Queensland businesses. In addition to the above payroll tax refunds, the deferral dates for payroll tax have also been extended.

Return period 2020Lodgement due dateDeferred payment due date
2019-20 annual21 July 20207 October 2021
July7 August 202014 January 2021
August7 September 202014 January 2021
September7 October 20207 October 2021
July-September quarter7 October 20207 October 2021
October9 November 202014 January 2022
November7 December 202014 January 2022
December14 January 202114 January 2022
October-December quarter14 January 202114 January 2022
July-December half-year14 January 202114 January 2022

 

As with the payroll tax refunds, eligible businesses need to apply online to defer the payment of their payroll tax liabilities.

If you have already been approved to defer payment until January 2021, you do not need to reapply for the revised due dates. These new dates will appear in your year-to-date returns in OSR Online.

Applications for payroll tax deferrals must be made by 31 December 2020.

Other Queensland 2020 budget announcements

The Treasurer also announced an additional $249 million from existing funding in COVID-19 related tax relief to small businesses, including the following:

  • A two-month waiver for businesses with payrolls of up to $6.5 million for July and August 2020 (as above);
  • An extension of the 25 per cent land tax rebate for FY21 to enable landlords to continue providing rental relief to tenants;
  • An extension of the exemption of JobKeeper payments for payroll tax;
  • An extension of existing rent relief to the end of 2020 for business renting state government premises and still affected by COVID-19.
  • Transfer duty would be abolished when eligible small businesses restructure to reduce the cost of doing business.

We are yet to see any details around the abolition of transfer duty (stamp duty) on eligible small business restructures, however we will provide an update when more information is made available.

The Government has announced the $2.5bn JobTrainer scheme to retrain, up-skill and open new job opportunities. The $1.5 billion to subsidise the wages of currently employed apprentices and trainees extends a pre-existing program called Supporting Apprentices and Trainees.

JobTrainer scheme for employers

The JobTrainer package has expanded the number of businesses that can access the 50% apprentice wage subsidy and extends the subsidy until 31 March 2021 (from 30 September 2020).

Originally, only businesses with less than 20 employees or larger employers employing apprentices/trainees let go by a small business were able to access the subsidy (for wages paid to apprentices employed by them as at 1 March 2020).

Now, businesses with under 200 employees can access the subsidy for apprentices and trainees they already had on their books as at 1 July 2020.

Employers will be reimbursed 50% of an eligible apprentice’s wage up to a maximum of $7,000 per quarter per apprentice.

Employers will be able to access the subsidy after an assessment by the Australian Apprenticeship Support Network.

The federal government estimates about 90,000 businesses will use the scheme, supporting about 180,000 apprentices or trainees. The scheme is scheduled to run till 31 March 2021.

JobTrainer scheme eligibility

Small businessMedium Business

Employ fewer than 20 people, or

A small business with fewer than 20 people, using a Group Training Organisation, and

The apprentice or trainee was undertaking an Australian Apprenticeship with you on 1 July 2020 for claims after this date. Claims prior to 1 July 2020, will continue to be based on the 1 March 2020 eligibility date.

Employ 199 people or fewer, or

A medium sized business with 199 people or fewer, using a Group Training Organisation, and

The apprentice or trainee was undertaking an Australian Apprenticeship with you on 1 July 2020.

Claims open nowClaims open on 1 October 2020.


You will need to provide evidence of wages paid to the apprentice. If the business subsequently is unable to retain the apprentice, another business can access the incentive if they then employ and pay wages to the apprentice.

Final claims for payment must be lodged by 30 June 2021.

How does the JobTrainer apprenticeship subsidy and JobKeeper work together?

They don’t. It is one or the other.

An employer will not be eligible to claim the apprentice wage subsidy for any period where they choose to claim the JobKeeper payment for the same apprentice.

An employer or Group Training Organisation will not be eligible for the JobKeeper payment where the employer is in receipt of an Australian Government wage subsidy for the same Australian Apprentice (for example Supporting Apprentices and Trainees and the Australian Apprentice Wage Subsidy).

JobKeeper eligibility information can be found in our previous blog article here: JobKeeper Employer Eligibility

JobTrainer for job seekers and school leavers

An additional 340,700 training places will be created to provide no or low cost courses into sectors with job opportunities. The Government is working with the States and Territories to develop a list of qualifications and skill sets to be covered by the program.

What’s missing from JobTrainer

JobTrainer doesn’t provide any new incentives or subsidies to encourage employers to take on new apprentices or trainees.

In April and May 2020 the number of new apprentices and trainees fell 33 per cent on the same months in 2019.

The Mitchell Institute has previously highlighted how fewer apprenticeships and traineeships can have negative long term effects.

This is especially true for school leavers. About 12 per cent of all school leavers take an apprenticeship or traineeship as a pathway into the workforce.

Not making a successful transition from school to the workforce is associated with poor long-term outcomes. These include higher rates of long term unemployment, high incidences of health problems and a lifetime engagement with the workforce characterised by low pay and precarious work.

The superannuation guarantee amnesty is a one-off opportunity to correct past unpaid SG amounts. Employers have a six-month window, until 7 September 2020, to disclose, lodge and pay unpaid SG amounts for their employees. Employers can claim deductions and not incur administration charges or penalties during this amnesty.

Superannuation guarantee amnesty background

The complexities surrounding employee remuneration has become evident in recent years and calculating the appropriate level of employer superannuation contributions is no exception.

Before the amnesty period expires on 7 September 2020, employers should take the opportunity to ensure all contributions have been made, and review the payroll classification to ensure the various components of the payroll are correctly classified as “Ordinary Times Earnings” (OTE).

If incorrect classifications have been made, now is the time to confront the mistakes and make a voluntary disclosure to the ATO under the amnesty.

Common mistakes when calculating superannuation guarantee payments

Some common mistakes we’ve seen include:

Under the amnesty, an employer may report any unpaid superannuation guarantee shortfall, without the imposition of the administration charge ($20 per employee per quarter), penalties, and the ability to claim a tax deduction for the shortfall.

Post the amnesty period, the penalties will be severe with a 200% penalty on top of the SGC shortfall, administration charge, and non-deductibility of the costs. The ATO has a much clearer view of non-compliant employers, with real time reporting of payroll since the introduction of Single Touch Payroll (STP).

Applicable period

The amnesty only covers periods between 1 July 1992 until the quarter ended 31 March 2018.

The voluntary disclosure under the amnesty is available to all employers, provided they have not been subject to an ATO investigation in respect of the unreported superannuation. Unlike other taxes, any shortfall of superannuation may extend back as far as 1 July 1992 and is not limited to the usual 4-year window.

Taking action now could save an employer significant tax costs, as well as any potential embarrassment. Remember the deadline is 7 September 2020, so we recommend acting now while there is still time.

How to apply for the employer superannuation amnesty

To apply for the amnesty, you must:

Once the ATO receives your forms, they will tell you which quarters are eligible for the amnesty.

SG shortfalls for any quarter between 1 July 1992 and 31 March 2018 may be eligible for the amnesty if they haven’t been disclosed previously, or aren’t subject to a current or previous audit.

See also:

If you have any questions regarding the superannuation guarantee amnesty, please contact your Quill Relationship manager or contact us if you need assistance with your business accounting or payroll needs.

The Government has updated the Superannuation Guarantee regulations in relations to Jobkeeper payments.  These changes provide clarity for employers in regards to how they calculated superannuation guarantee payments for employees receiving Jobkeeper.

Key facts on Jobkeeper superannuation guarantee changes

The changes to the Superannuation Guarantee (Administration) Regulations 2018 to ensure that:

These changes exclude from ‘salary and wages’ for the purposes of calculating the employer’s superannuation guarantee (SG) shortfall, amounts that are paid to an employee to satisfy the ‘wage condition’ under the Jobkeeper Scheme to the extent that such payments exceed payments for the performance of work. Payments made to satisfy the wages condition would otherwise be considered salary or wages and ordinary times earnings.

The following examples best illustrate how these changes work.

Example: Employee’s salary or wages do not exceed the amount required to be paid for the performance of work

Liz is a full-time employee who usually earns $3,000 per fortnight. As a result of the Coronavirus, her employer issues a Jobkeeper enabling stand down direction and reduces her hours of work. She now earns $2,000 per fortnight for the performance of work. Liz’s employer is entitled to Jobkeeper payments for her.

During the Jobkeeper fortnight beginning on 25 May 2020, Liz takes five days of personal leave at full-pay. Her employer pays her $2,000 for that fortnight: $1,000 for the days she worked, and $1,000 in relation to the taking of personal leave.
Liz’s salary or wages and ordinary time earnings for the fortnight are $2,000.

The Regulations do not apply as the salary or wages paid to Liz do not exceed the amount required to be paid to her for the performance of work.

The minimum superannuation contribution her employer must make to avoid a SG charge liability for the relevant quarter is 9.5 per cent of Liz’s ordinary time earnings. Her ordinary time earnings will include the $2,000 she was paid in respect of the fortnight.

Superannuation Guarantee amount payable: $2,000 x 9.5% = $190

Example: Employee’s earnings for the performance of work are less than $1,500 per fortnight

Rachael is a part-time employee who continues to earn her usual wages of $1,000 per fortnight. To satisfy the wage condition for Jobkeeper payment for Rachael, her employer pays her an additional $500 per fortnight so that she is paid a total of $1,500 per fortnight. Rachael’s employer is entitled to Jobkeeper payments for her.

The additional payment of $500 is excluded from being salary or wages because it is paid by Rachael’s employer for the purpose of satisfying the wage condition and is not paid to Rachael for the performance of work. Therefore, Rachael’s salary or wages and ordinary time earnings for the fortnight are $1,000.

The minimum superannuation contribution her employer must make in order to avoid a liability to SG charge for the relevant quarter is 9.5 per cent of Racheal’s ordinary time earnings. Her ordinary time earnings will include the $1,000 she was paid in respect of the fortnight.

Superannuation Guarantee amount payable: $1,000 x 9.5% = $95

Example: Employee stood down and employer not entitled to Jobkeeper

Erin is a long term casual employee who was earning approximately $1,750 per fortnight. As a result of the Coronavirus, she has been stood down by her employer. Her employer has a reasonable expectation of participating in the Jobkeeper Scheme and satisfies the wage condition in respect of Erin by paying her $1,500 for the first Jobkeeper fortnight.

After making the payment to Erin, her employer discovers that they are not entitled to Jobkeeper payment for Erin under the Jobkeeper Rules.

However, the Regulations still apply as the payment of $1,500 is considered salary or wages paid to Erin in respect of a Jobkeeper fortnight.

As Erin remains stood down, the entire amount is excluded from being salary or wages as it is paid by her employer for the purpose of satisfying the wage condition and is not paid to Erin for the performance of work.

Therefore, Erin’s salary or wages and ordinary time earnings for the fortnight are nil. This means her employer is not required to make a superannuation contribution in respect of Erin for the fortnight in order to avoid a liability to SG charge.

Superannuation Guarantee amount payable: Nil

Example: Employee’s earnings for the performance of work are less than $450 for a calendar month

Nelson is a long term casual employee who earns $400 in April 2020 for the performance of work. To satisfy the wage condition for Jobkeeper payment for Nelson, his employer pays him $400 for the month, plus an additional $2,600, totalling $3,000 before tax for that month.

Nelson’s employer is entitled to Jobkeeper payments for him.

The additional payment of $2,600 is excluded from being salary or wages because it is not an amount that is required to be paid to Nelson for the performance of work.

The remaining $400 is also excluded from being salary or wages under new s. 12A(3) of the SGA Regs because his earnings in relation to the performance of work during the calendar month are less than $450.

Therefore, Nelson’s salary or wages and ordinary time earnings for the month of April are nil. This means his employer is not required to make a superannuation contribution in respect of Nelson for that month in order to avoid a liability to SG charge.

Superannuation Guarantee amount payable: Nil

The Explanatory Statement is available here.

Processing Jobkeeper and Superannuation payments through Xero payroll

Although the above intricacies of how superannuation and Jobkeeper payments work together can be complex, fortunately for employers using Xero as their payroll system ensuring the correct payments are made to employees is simplified.

If you have any questions regarding how to calculate superannuation guarantee payments for employees receiving Jobkeeper, please contact your Quill Relationship manager or contact us if you need assistance with your business accounting or payroll needs.

Article Contents

The HomeBuilder $25,000 grant eligibility requires those building a new home or undertaking significant renovations to spend at least $150,000 (but not more than $750,000) on the project.  In addition the pre-renovation value of the property must be $1.5m or less, which rules out adding that extra wing to your Vaucluse mansion.

Further information on the HomeBuilder $25,000 grants and details around eligibility will be updated as the Government released more detail.

Updated Frequently Asked Questions: 14 July 2020

Scott Morrison’s Announcement on the HomeBuilder $25,000 Grant

Prime Minister Scott Morrison said HomeBuilder would save jobs at a time when the industry was facing extreme uncertainty.

“This is about targeted taxpayer support for a limited time using existing systems to ensure the money gets used how it should by families looking for that bit of extra help to make significant investments themselves,” he said.

“If you’ve been putting off that renovation or new build, the extra $25,000 we’re putting on the table, along with record-low interest rates, means now’s the time to get started.”

Renovation work will not include structures separate to the main property, such as swimming pools, tennis courts and sheds.

The Treasury website has further information here: https://treasury.gov.au/coronavirus/homebuilder

HomeBuilder $25,000 Grant Eligibility Means Testing

In addition the HomeBuilder $25,000 grant eligibility is means tested.  Only singles who earned no more than $125,000 the previous financial year and couples who earned up to $200,000 will be eligible for the grants. More details will be released soon on whether these thresholds are taxable income or adjusted taxable income.

Homebuilder 25000 Grant Eligibility

Image courtesy of news.com.au

Can Investors Access HomeBuilder $25,000 Grant?

No. The HomeBuilder $25,000 grant eligibility requires the grant to be spent on a principal place of residence so therefore cannot be spent on investment properties.  In addition, companies or trusts who own residential property will not be eligible.

Eligible Project Types and Time-frames

Sheds, yurts, granny flats, pools, tennis courts and any other structure not attached to the home will not be eligible. The $25,000 HomeBuilder grant will be available from June 4 until December 31.

Unfortunately DIY renovators are not eligible for the $25,000 HomeBuilder grant.  Only projects undertaken by licensed builders will be eligible for the $25,000 grant.

There had been concern from some in the industry that the Government money would incentivise “cowboys” to rush into the market with little regard for health and safety, which the scheme takes steps to address.

They include requiring that all eligible builders be licensed or registered before the Government’s announcement, keeping the timeframe for the scheme to six months, and having tighter eligibility for the program.

HomeBuilder Frequently Asked Questions (FAQs)

What is HomeBuilder?

HomeBuilder is a time-limited, tax-free grant program to help the residential construction market to get through the Coronavirus pandemic. HomeBuilder will provide eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home.

When can I access HomeBuilder?

HomeBuilder will be available for building contracts signed between 4 June 2020 and 31 December 2020.

How can I access HomeBuilder? How do I apply?

You will be able to apply for HomeBuilder through your relevant State or Territory revenue office or equivalent authority, once the State or Territory Government that you live in (or plan to live in) signs the National Partnership Agreement.

States and Territories will backdate acceptance of HomeBuilder applications to 4 June 2020 once the National Partnership Agreement is signed.

You should contact your relevant State or Territory revenue office for more information about when and how you will be able to apply for HomeBuilder.

When will I receive HomeBuilder?

HomeBuilder grants will be paid by the relevant State or Territory authority provided the applicant meets the eligibility criteria. The exact timing and who the grant is paid to us unknown, however we expect the grant will be paid directly to the builder / developer.

When will the HomeBuilder Grant be paid?

HomeBuilder is being implemented in partnership with States and Territories. For new builds, grants will be paid in line with the timing of payments for first home owner grants or at the discretion of your State and Territory if there is no first home owner grant schemes in place. For substantial renovations, grants will be paid once at least $150,000 of the contract price has been paid in respect of the renovation.

Who pays HomeBuilder and who receives it?

It is expected that the relevant State or Territory revenue office will distribute the $25,000 grant directly to the applicant.

Am I eligible to receive HomeBuilder?

To access HomeBuilder, owner-occupiers must meet the following eligibility criteria:

  • you are a natural person (not a company or trust)
  • you are aged 18 years or older;
  • you are an Australian citizen (at this stage permanent residents are NOT eligible);
  • you meet one of the following two income caps:
    • $125,000 per annum for an individual applicant based on your 2018-19 tax return or later; or
    • $200,000 per annum for a couple based on both 2018-19 tax returns or later;
  • you enter into a building contract between 4 June 2020 and 31 December 2020 to either:
    • build a new home as a principal place of residence, where the property value (house and land) does not exceed $750,000; or
    • substantially renovate your existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, and where the value of your existing property (house and land) does not exceed $1.5 million;

Owner-builders and those seeking to build a new home which will be used as an investment property, or renovate an existing home which is an investment property, will not be eligible for HomeBuilder.

The registered or licensed builder (depending on the state or territory) must demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at 1 July 2019, if requested by the purchaser.

Are the HomeBuilder income caps based on gross taxable income or adjusted taxable income?

It is not definitive whether income caps are measured against an person or couples their gross taxable income or adjusted taxable income. More will be known when the various States release their application processes.

At this it’s most likely that the income caps for the Homebuilder grant will be based on gross taxable income (excluding superannuation) which is the same criteria as the First Home Loan Deposit Scheme (FHLDS). 

Your gross taxable income can be found on your ATO issued Notice of Assessment.

How do I prove my taxable income?

Taxable income is shown on your notice of assessment. The notice of assessment is issued by the Australian Taxation Office once your tax return for an income year is processed and this can be used to demonstrate your taxable income.

Note: Taxable income is your gross income less allowable deductions and represents the amount of income you pay tax on. More information on taxable income can be found at:https://www.ato.gov.au/Individuals/Lodging-your-tax-return/In-detail/What-is-income-/#Taxableincome

What if I don’t lodge a tax return?

If you didn’t earn any income or you earned below the tax free threshold you may be able to lodge a ‘nil tax return’ or a ‘non lodgement advice’ to the Australian Taxation Office. Evidence of a nil tax return or non- lodgement advice is appropriate evidence of your income in the relevant financial year. Additional information on requirements for lodging a tax return is available on the Australian Taxation Office website.

Will the tax return have to match the name on the building contract and land title?

Yes, the applicant must be the person(s) who is/are listed on the certificate of title of the property, and the notice of assessment.

What is the definition of ‘couple’?

This will be determined by the relevant State or Territory authority. Generally this would include couples in a registered domestic relationship, or those living as a couple on a genuine domestic basis.

What proof do I need to provide to show that I reside or intend to reside at the property?

This will be determined by the relevant State or Territory authority. Implementation of the HomeBuilder program is currently being considered by States and Territories. It is expected that, where possible, States and Territories will align the HomeBuilder application processes with existing processes for First home owner grants (or similar).

My partner and I jointly own our home. I am an Australian citizen but my partner is not. Can I apply even though the home is jointly owned?

The Scheme is only open to Australian citizens. Eligible owner-occupier(s) must be listed on the property’s certificate of title, and they must meet the eligibility criteria of the program. Permanent residents are not eligible for the Scheme.

Also read: Are permanent residents eligible to apply for the $25,000 building and renovation grant?

Am I able to apply for a second HomeBuilder grant for my property as I wish to undertake two substantial renovations on my property?

No. A property is only eligible for one HomeBuilder grant. The eligible applicant can only receive the HomeBuilder grant once.

I already own land but haven’t signed a contract to build a new house – am I still eligible?

Yes, if you meet the following criteria:

  • If you own a property (house and land), and knock the house down to rebuild – this will be counted as a substantial renovation, and therefore subject to the renovation price range of $150,000 to $750,000 provided the total value (house and land) of the property does not exceed $1.5 million pre- renovation;
  • If you own vacant land before 4 June 2020, and then build, the total value of the land and new build cannot exceed $750,000; or
  • If you buy the land after announcement, and then build, the total value of the land and build cannot exceed $750,000.

What is the definition of an owner-builder?

A licensed or registered builder cannot undertake building or substantial renovation work on their own property. An owner-builder is intended to mean a person who is the registered or licensed builder and who takes legal responsibility for domestic building work carried out on their own land/property. Further detail will be made available through the relevant State or Territory administrative authority.

What if I renovate my house and then want to sell? Is there a limit on how long I need to live there?

It is expected that you will continue to live at the property (as your principal place of residence) for at least 6 months. However, this will be confirmed by the relevant state or territory authority, noting that implementation of the HomeBuilder program is currently being considered by States and Territories.

A family member or relative is a Builder. Can they help me build my new house under HomeBuilder?

Details regarding implementation of the HomeBuilder program are currently being considered by States and Territories to ensure it can be implemented effectively. It is expected that, in negotiating the contract, the parties must deal with each other at arm’s length. This means the contract must be made by two parties acting freely and independently of each other, and without offering favour for some special relationship, such as being a relative. The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market price.

Is there a limit to how many people can get HomeBuilder?

No. HomeBuilder is an uncapped, time-limited grant.

Are permanent residents eligible for the $25,000 HomeBuilder Grant?

No. As per the eligibility requirements released by Treasury, only Australian Citizens are eligible to apply for the $25,000 HomeBuilder Grant.

At this stage it appears likely that the eligibility for the Homebuilder grant will be the same as the First Home Loan Deposit Scheme and only open to Australian citizens.

Also read: Are permanent residents eligible to apply for the $25,000 building and renovation grant?

Can a joint application for the HomeBuilder grant be made where one applicant is an Australian citizen and the other a permanent resident or holder of a different visa type?

No. Both applications must be Australian citizens.  This is outlined in the Treasury fact sheet:

“Carla and Andrew apply for HomeBuilder via the relevant revenue office which conducts the eligibility checks and confirms that both Carla and Andrew are Australian citizens.”

Assuming the eligibility criteria for the $25,000 HomeBuilder grant is the same as the First Home Loan Deposit Scheme then BOTH members of a couple would need to be Australian citizens.

Are New Zealand citizens eligible for the $25,000 HomeBuilder grant?

No, sorry bro, as per the above, to be eligible for the HomeBuilder the applicant(s) must be Australian citizens.

I already own land but haven’t signed a contract to build a new house – am I still eligible?

Yes, if you meet the following criteria:

  • If you own a property (house and land), and knock the house down to rebuild – this will be counted as a substantial renovation, and therefore subject to the renovation price range of $150,000 to $750,000 provided the total value (house and land) of the property does not exceed $1.5 million pre-renovation;
  • If you own vacant land before 4 June 2020, and then build, the total value of the land and new build cannot exceed $750,000; or
  • If you buy the land after announcement, and then build, the total value of the land and build cannot exceed $750,000.

I’ve already entered into a contract to renovate or build, or constructions is already underway – am I eligible?

No. As per the eligibility requirements, the HomeBuilder grant can only be applied for new contacts entered into between 4 June and 31 December 2020.

I’ve signed a contract to build or renovate before 4 June 2020, what are my options?

The HomeBuilder grant can only be applied for new contacts entered into between 4 June and 31 December 2020.

If construction has not commenced but you’ve signed a contract prior to 4 June 2020, speak to your builder about your options.

What type of dwellings are eligible under HomeBuilder?

All dwelling types (house, apartment, house and land package, off-the-plan, etc) are eligible under HomeBuilder, in accordance with the requirement that the owner-occupier must contract to build a new dwelling or substantially renovate their existing dwelling. The applicant must also meet the eligibility requirements outlined above.

Are off the plan apartments eligible for the Homebuilder grant?

Yes. As per the FAQs included in the treasury documents, a contact for the off the plan apartment will be eligible provided the other eligibility criteria is met:

  • you enter into a building contract between 4 June 2020 and 31 December 2020 to build a new home (including an off the plan apartment) as a principal place of residence, where the property value (house and land) does not exceed $750,000;

It is unknown whether HomeBuilder will be available for an off the plan apartment where construction has already commenced as the grant is to incentivise and stimulate new construction in the short term.

What are the price caps associated with HomeBuilder?

HomeBuilder is subject to two prices: a contract price cap (for new builds and renovations) and an income cap for applicants.

Contract price cap

A national price cap of $750,000 will apply for new home builds. This means that the value of new builds (house and land), house and land packages, and off-the-plan purchases must not exceed $750,000 to be eligible for HomeBuilder.

For renovations, a building contract price range of between $150,000 and $750,000 will apply and the total value of your property before renovation must not exceed $1.5 million.

The $150,000 minimum building contract cannot include the cost of the land. The HomeBuilder grant is specifically targeted to stimulate building activity.

Income price cap

Eligible applicants must meet one of the following two income caps:

  • $125,000 per annum for an individual applicant based on the 2018-19 tax return or later; or
  • $200,000 per annum for a couple based on their combined 2018-19 tax return or later.

The income price cap, as well as the eligibility criteria for the applicant, were chosen to reduce complexity as they align with the Commonwealth Government’s First Home Loan Deposit Scheme.

Is the HomeBuilder grant taxed?

No – a HomeBuilder grant will not be taxed. This is consistent with existing state and territory First Home Owner Grant programs.

What if I want to buy a recently built home that has never been lived in before? (eg spec build)

No. HomeBuilder is intended to support activity and provide a pipeline of work for the residential construction sector in the second half of 2020. An existing home that has already been completed, or started construction before 4 June, does not qualify for HomeBuilder.

Further, where construction commences on or after 4 June 2020, provided the contract is signed between 4 June and 31 December 2020, then the property purchase may be eligible for HomeBuilder.

What if I want to buy an off-the-plan apartment or townhouse?

Off-the-plan apartments or town houses are eligible for HomeBuilder.

If you sign the contract to buy the off-the-plan dwelling on or after 4 June 2020 and on or before 31 December 2020 and construction commences on or after 4 June 2020 then the property purchase may be eligible for HomeBuilder.

However, if you sign the contract to buy the dwelling after 4 June 2020, and construction on the home commenced before 4 June 2020, then the home does not qualify for HomeBuilder.

I want to build a new home in a land lease community or retirement village. Is my property eligible for HomeBuilder?

Eligible owner-occupier(s) must be listed on the property’s certificate of title. The owner-occupier must also be a natural person (not a company or trust), and meet the other eligibility criteria of the program.

What about pre-fabricated houses? Are they considered construction and eligible for HomeBuilder?

Construction must be undertaken by a registered or licensed building service ‘contractor’ who is named as a builder on the building licence or permit. Provided the construction is undertaken by a licensed builder and meets all other eligibility requirements, it will be eligible for HomeBuilder.

What happens if approvals to build my dwelling are delayed?

Initially the construction pursuant to the contract must have commenced within three months of the contract date, however this requirement has been removed from the scheme.

Can the HomeBuilder grant be used to build or renovate an investment property?

No. To be eligible for the $25,000 HomeBuilder grant the building contract must be for a property that is or will be a the principal residence of the applicant(s).

There is nothing preventing or restricting the home becoming an investment in the future, however applicants need to be mindful of schemes to artificially class an investment property as a principal residence.

Are properties owned by self-managed super funds (SMSFs) or trusts eligible for the HomeBuilder grant?

No. To be eligible for the $25,000 HomeBuilder grant the building contract must be for a property that is or will be a the principal residence of the applicant(s).

Investment properties held by trusts including self-managed superannuation funds will not be eligible.

What renovations will be eligible

To be eligible for HomeBuilder, the value of renovations must be within the price range of $150,000 and $750,000, the total value of your existing house and land must not exceed $1.5 million.

Renovations must improve the accessibility, live-ability and safety of the property. This excludes building a tennis court, pool or shed for the renovation contract for eligibility purposes.

Renovations must be completed by a licenced or registered builder (depending on the state or territory). In addition, any building or renovation contract entered into must be at arm’s length. This means the contract must be made by two parties freely and independently of each other. The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market place.

Are knock-down rebuilds considered “renovations”?

Yes. Knock-down rebuilds are considered substantial renovations for the purposes of HomeBuilder.

Is landscaping considered a substantial renovation?

Substantial renovations are not expected to include renovations that are primarily cosmetic in purpose, such as landscaping. A renovation must substantially alter the existing dwelling.

Are granny flats eligible for HomeBuilder?

No, standalone granny flats are not eligible for the HomeBuilder grant. A granny flat built as an extension to an existing house may be eligible.

The renovation works must be to improve the accessibility or safety or liveability of the dwelling. It cannot be for standalone granny flats, swimming pools, tennis courts, and structures that are not connected to the property (i.e. outdoor spas and saunas, sheds or standalone garages).

Is the building of a granny flat eligible for the HomeBuilder grant?

Renovations must be “attached to the home” to the eligible.  This means construction of a separate granny flat would not be eligible however an attached extension physically connected to an existing home may be eligible under the HomeBuilder scheme.

I am not a first home buyer – can I access HomeBuilder?

Yes. Provided you meet the eligibility criteria, you can apply for a HomeBuilder grant. However, HomeBuilder is not available for investment properties or to owner-builders.

Is the $25,000 HomeBuilder Grant only for first home buyers?

No. Provided you meet the eligibility criteria, you can apply for a HomeBuilder grant. You do not need to be a first home buyer. However, if you are a first home buyer additional State based incentives such as reduced or nil stamp duty may apply if you are builder a new home (house and land packages etc).

Can the $25,000 HomeBuilder amount be used as part of a deposit to build a new home?

No, however it will likely reduce the amount you need to borrow if you are looking at purchasing a new house and land contract. The $25,000 HomeBuilder grant if approved will not be paid to you personally, therefore it cannot be used to fund part of your home deposit.

Also, if you are a first home buyer there are likely other first home owner grants, nil or discounted stamp duty as well as the First Home Loan Deposit Scheme (FHLDS) you can access.

How do I apply for HomeBuilder?

As at 19 June 2020, applications are not currently open for any State or Territory.

Information on how to apply will be made available when the National Partnership Agreement is finalised. It is expected that, where possible, States and Territories will align the HomeBuilder application processes with existing processes for first home owner grants (or similar). Applicants will be able to apply in relation to eligible contracts that are entered into from 4 June 2020 up to 31 December 2020.

States and Territories will backdate acceptance of HomeBuilder applications to 4 June 2020 once the National Partnership Agreement is signed.

Home Builder Grant Application by State

The below table provides links to the relevant application forms (both online applications and PDFs) by State and Territory.

State or TerritoryStatusApplication Form
NSWOPEN

HomeBuilder Grant NSW Application Form

Application Guidelines NSW (PDF)

VICOPEN

HomeBuilder Grant VIC Application Form

Application Guidelines VIC (PDF)

QLDOPEN

HomeBuilder Grant QLD Application Form

Application Information

SAOPEN

HomeBuilder Grant SA Application Form

Application Information

TASOPEN

HomeBuilder Grant TAS Application Form

Application Information (PDF)

WAOPEN

HomeBuilder Grant WA Application Form

Application Information

ACTOPEN

HomeBuilder Grant ACT Application Form

Application Information

NTOPEN

HomeBuilder Grant NT Application Form

Application Information

You should contact your relevant State or Territory revenue office for more information about when and how you will be able to apply for HomeBuilder.  We will update the following links and provide information on State based applications as they become available.

Apply for HomeBuilder Grant NSW

Update 11/08/2020

Revenue NSW is now accepting applications for the Commonwealth HomeBuilder Grant.

For further information on eligibility and the application process, please refer to the HomeBuilder guidelines and application form available on the Revenue NSW website.

You can also contact Revenue NSW at Home.Builder@revenue.nsw.gov.au or call 1300 130 624.

Apply for HomeBuilder Grant VIC

Update 10/08/2020

State Revenue Office Victoria is now accepting applications for the Commonwealth HomeBuilder Grant. For further information on eligibility and the application process, please refer to the HomeBuilder guidelines and application form available on the State Revenue Office Victoria website.

To provide certainty and confidence to Victorian HomeBuilder participants, the construction commencement timeframe will be extended to six months given the unique COVID-19 restrictions throughout the state. For further information see the HomeBuilder Grant Guidelines.

Apply for HomeBuilder Grant QLD

Update 04/08/2020

The Queensland Office of State Revenue (OSR) is now accepting applications for the Commonwealth HomeBuilder grant. For further information on eligibility and the application process, please refer to the OSR website.

You can also contact the OSR at HomeBuilderGrant@treasury.qld.gov.au or call 1300 300 734.

It is expected that an online application will be available from 10 August 2020. Further information from the Queensland Government in regards to the HomeBuilder Grant:

You can download the PDF application form here: HomeBuilder Grant QLD Application Form

QLD – The Office of State Revenue

Apply for HomeBuilder Grant SA South Australia

Update 17/07/2020

South Australian residents can now apply for the HomeBuilder Grant via RevenueSA.

HomeBuilder Grant – South Australia

HomeBuilder Grant – South Australia Application Form (PDF)

Apply for HomeBuilder Grant Tasmania

Update 06/07/2020

Applications for both the State and Federal HomeBuilder grants are now open. The Tasmanian Government’s $20,000 grant and the Morrison Government’s $25,000 grant means Tasmanians can potentially access up to $45,000 for their new home build.

A. Tasmanian HomeBuilder Grant (State Government) Updated 6 July 2020
Tasmanian HomeBuilder Grant is a grant of $20 000 ​avai​lable to ​owner-​occupiers for eligible new home builds where the contract is signed between 4 June 2020 and 31 December 2020 inclusive. ​​

For the eligibility criteria, building and contract requirements and the application process for both the Tasmanian and Commonwealth ​Grants, refer to the HomeB​uilder Grant Guideline.​

B. Commonwealth HomeBuilder Grant (Commonwealth Government) Updated 6 July 2020
Commonwealth HomeBuilder Grant is a grant of $25 000 for eligible owner-occupiers (including first home buyers) building a new home, or substantially reno​vating an existing home, where the contract is signed between 4 June 2020 and 31 Dec 2020 inclusive.

For the eligibility criteria, building and contract requirements and the application process for both the Commonwealth and Tasmanian Grants, refer to the HomeB​uilder Grant Guideline.​

Application form – Commonwealth $25,000 HomeBuilder Grant (Tasmanian Residents)

Apply for HomeBuilder Grant NT

Update 04/08/2020

The Northern Territory Revenue Office is now accepting applications for the Commonwealth HomeBuilder grant.

For further information on eligibility and the application process, please refer to the HomeBuilder Grant Application Form and Lodgement Guide.

HomeBuilder Grant Application Form and Lodgement Guide PDF (393.5 KB)

Apply for HomeBuilder Grant WA

Update 29/07/2020

Revenue WA is now accepting applications for the Commonwealth HomeBuilder grant.

For further information on eligibility and the application process please refer to the application form.

Apply for HomeBuilder Grant ACT

Update 29/07/2020

Information on the application processes for those wishing to access the Commonwealth HomeBuilder grant is available through the Australian Capital Territory’s Revenue Office, the ACT Revenue Office. The ACT has a two-part application process.

Applicants can now complete Part A by registering their interest for HomeBuilder. Applicants must lodge the Part A form by 31 December 2020 for their application to be considered. If you register your interest you will be advised of updates to application forms and supporting materials. Completing the registration form does not in any way constitute eligibility for the grant.

A comprehensive application form will soon be available for applicants to complete Part B of their application. This form requires detailed information about the applicant, their builder, type of construction, as well as detailed supporting documentation.

What documentation will I need to provide?

The State or Territory revenue office will require certain documents to process your application. It is expected that you will need to provide the following at a minimum:

  • proof of identity;
  • a copy of the contract, dated and signed by you and the nominated registered or licenced builder;
  • a copy of the builder’s registration or licence (depending on the state you live in);
  • a copy of your 2018-19 or 2019-20 tax return or ATO issued Notice of Assessment to demonstrate your eligibility against the income cap; and
  • documents such as council approvals, building contracts or occupation certificates and evidence of land value.

More information on the documentation you will need to provide will become available through the relevant State or Territory authority.

When will I know if my HomeBuilder application is successful?

The relevant state or territory administering agent will notify you of the outcome.

What happens if my HomeBuilder application is not successful?

If you are dissatisfied with the outcome of your HomeBuilder application, you can request that the matter is referred to the relevant state or territory dispute resolution body. More information on the appeals process will become available in due course.

What happens if there is a change in circumstance and I’m no longer eligible?

If your circumstances change after you have applied for HomeBuilder but have not yet received the payment, and no longer meet the eligibility criteria, you will need to notify your State or Territory revenue office immediately.

Who pays HomeBuilder and who receives it?

The relevant State or Territory revenue office will distribute the $25,000 grant directly to the applicant.

Other Related Articles

The $25,000 HomeBuilder grant is one of a number of COVID-19 Government stimulus measures to boost the Australian economy.

To view more related articles on COVID-19 from Quill, please browse our blog.

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