2021 Budget & Planning Opportunities

The Federal Government released a big spending 2021-22 Federal Budget to help create jobs, business investment and confidence after COVID-19 created the first Australian recession since 1990,

The big winners are: 

  • Business – the instant tax deduction for buying equipment, cars, computers etc and the loss carry back for companies is extended for another year.
  • Low to middle income taxpayers – they can enjoy another year of the tax offset of up to $1,080 for individuals or $2,160 for dual income/working couples. You get this after you lodge your 2021 tax return.
  • Job Seekers – Given economic growth is expected to be 4.25% in 2021/22 and big government spending, unemployment is expected to fall to lower than 5% this year.
  • Retirees – the downsizing rule means 60 year-olds and older can sell a big home, buy a smaller one and put $300,000 each into super. This is fantastic. It was previously only open to over 65 year-olds and older. Getting rid of the “work test” for those 67 to 74 years of age means retirees can put up to $100,000 a year into super over that time.
  • Young savers – under the First Home Super Scheme, $50,000 can be drawn from super rather than $30,000 for a home loan deposit.
  • Home buyers – the New Home Guarantee scheme means eligible new homebuyers only require a 5% deposit. The Family Home Guarantee scheme means eligible single parents only require a 2% deposit for a home purchase.

There are a number of key areas for individuals we would like to make you aware of.

Key Point  Benefit to You
$250 self-education expense reduction removed


Currently, individuals claiming a tax deduction for self-education expenses need to reduce their claim by the first $250. This reduction has now been removed. This is expected to apply from 1 July 2022 onwards. 

Less tax to pay, and maybe a larger tax refund for individuals.
2% Deposit Home Loans for Single parents


From 1 July 2021, the Government will guarantee 10,000 single parents with dependents to enable them to have a home loan with a deposit as low as 2%. It applies to both first home buyers or previous owner-occupiers. You must be an Australian citizen with a taxable income of no more than $125,000. 

Improved opportunity for home ownership for single parents.
5% deposit home loans for first home buyers building new homes


This 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 as low as 5%. 

Improved opportunity for first home ownership.
First Home Saver Scheme Cap Increase


This scheme allows you to save for your first home inside your super. You can make before tax and after-tax contributions into your super, and up to $50,000 of your voluntary contributions can be released for your first home purchase. This is expected to apply from 1 July 2022 onwards. 

Improved opportunity for first home ownership.
No more work test for Voluntary Super Contributions


Individuals aged 67 to 74 years can make non-concessional or salary sacrifice super contributions without meeting the existing “work test” (working at least 40 hours over a 30 day period).

This is expected to apply from 1 July 2022 onwards. 

Easier to contribute more funds into your super.
Extended access to “Downsizer” contributions from sale of family home


Currently, downsizer contributions allow individuals over age 65 to contribute $300,000 (or $600,000 for couples) into super from the proceeds of selling their family home. 

This is a great way to “top up” your super as you approach retirement.

Business Owners 

Key Point  Benefit to You
Company Tax Rate of 25% for 2022 tax year


From 1 July 2021, the company tax rate for “base rate” companies will reduce from 26% to 25%. 

Less Tax to Pay


It may be possible to defer some income from this 2021 tax year to the 2022 tax year to reduce your company tax. 

Stage 3 Individual tax cuts remain unchanged


From 1 July 2024 onwards, individual income up to $200,000 will be taxed at a maximum of 30%. 

This may help you manage your Div7A loans better.


If you have a company with Div7a Loans, careful planning of your Div7A loan repayments could significantly improve your tax position. We need to review this as part of your 2021 Tax Planning. 

Company Loss Carry Back extended to 2023


Current year losses can be offset against prior year profits of Companies. 

This could result in significant tax refunds for you.


If you have a Company, as part of 2021 Tax Planning you need to consider your tax position from 1 July 2019 and forecasts of your tax position until 30 June 2023. 

Temporary Full Expensing extended to 30 June 2023


If your business turnover is less than $5 billion, you can deduct the full cost of eligible depreciating assets of any value.

This could significantly reduce tax payable and could result in significant tax refunds for you.


An immediate full deduction for the cost of these assets will reduce your 2021 tax. If you purchase enough assets to create a tax loss this year, combining this with the Loss Carry Back could give you significant tax refunds of tax paid in prior years. 


If you have any questions regarding the 2021 Federal Budget or if you need to take any actions before 30 June 2021 to reduce your tax – please contact our office and one of our accountants will help you.


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