Tax Rates 2020-2021 Year (Residents)
The 2021 financial year starts on 1 July 2020 and ends on 30 June 2021. The financial year for tax purposes for individuals starts on 1st July and ends on 30 June of the following year.
The rates were modified rates to lift the 32.5% rate ceiling from $87,000 to $90,000 in the 4 years from 1 July 2018 to 30 June 2022, with further adjustments from 1 July 2022 and 2024.
In changes announced in Budget 2020 (on 6 October 2020) the 1 July 2022 adjustments were brought forward to apply from 1 July 2020. The previously legislated adjustments to apply from 1 July 2024 remain unchanged.
Key tax bracket changes announced in Budget 2020:
– the 19% rate ceiling lifted from $37,000 to $45,000
– the 32.5% tax bracket ceiling lifted from $90,000 to $120,000
This tax table reflects the proposed new scale from 1 July 2020 (as at 6 October 2020).
|Taxable Income||Tax On This Income|
|$0 to $18,200||Nil|
|$18,201 to $45,000||19c for each $1 over $18,200|
|$45,001 to $120,000||$5,092 plus 32.5c for each $1 over $45,000|
|$120,001 to $180,000||$29,467 plus 37c for each $1 over $120,000|
|$180,001 and over||$51,667 plus 45c for each $1 over $180,000|
The above tables do not include Medicare Levy or the effect of Low Income Tax Offset (“LITO”) or LMITO. Under changes outlined in Budget 2020 the low income tax offset (up to $700) is to apply from 1 July 2020 (previously 2022) and the low and middle income tax offset (up to $1,080) is retained.
There are low income and other full or partial Medicare exemptions available. A Medicare Levy Surcharge may also be applicable and is applied on a progressive basis if eligible private health insurance cover is not maintained.
Foreign residents’ capital gains tax
Temporary residents who are Australian tax residents are not affected by the change.
As the legislation became law on 12 December 2019, affected taxpayers will, if necessary, need to lodge or seek amendments for relevant tax returns back to 2016-17. The ATO has advised that late interest and other penalties will be reduced, provided the taxpayer seeks to comply “within a reasonable timeframe”。
There are limited exclusions from the rules for certain life events occurring within 6 years of becoming a foreign resident.
Super rules for older Australians
The Treasurer has announced some loosening of super contributions rules for older Australians, with the changes are intended to have effect from the 2020-21 financial year.
- From July 1, 2020 Australians aged 65 and 66 will be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the Work Test. This will align the Work Test with the eligibility age for the Age Pension.
- The age limit for spouse contributions will be increased from 69 to 74 years.
- The age limit for access to the bring-forward arrangements be extended to those aged 65 and 66.
The Coronavirus response comprised a number of measures announced and legislated beginning from March 2020. A number of measures extend into the 2020-21 year and beyond.
For an overview of all the measures see: Coronavirus response measures.
New or amended business measures applying from 2020-21 include (not exhaustive):
- Loss carry-back provisions allow tax losses from the 2019–20, 2020–21 or 2021–22 years to offset previously taxed profits from 2018–19 or later (see company tax rates)
- Div 7A benchmark interest rate for 2020–21 is 4.52%
- Small business entities and medium business entities can fully expense depreciating assets acquired from 7.30 pm AEDT on 6 October 2020 until 30 June 2022
- The instant asset write off threshold for small businesses has increased to $150,000 until 31 December 2020, with first use/ installation date extended to 30 June 2021
This page was last modified 2021-03-31