On Tuesday 6 October 2020, Treasurer Josh Frydenberg delivered the Federal Budget for 2020/21, describing it as an “economic recovery plan” to tackle the challenges brought about by the drought, bushfires, and the COVID-19 pandemic, which have impacted almost every Australian and every Australian business.

Some of the measures announced may affect your salary packaging benefits, so we’ve summarised the key announcements below.

Income tax cuts brought forward to 1 July 2020
The Government will bring forward Stage 2 of its legislated tax cuts to 1 July 2020. The 19 per cent threshold will rise from $37,000 to $45,000, and the 32.5 per cent threshold will go from $90,000 to $120,000. The 2020/21 income tax thresholds are as follows:

Marginal tax rate for band
(excl. 2% Medicare levy)		Taxable income band 2019-20Taxable income band 2020-21
Nil$0 – $18,200$0 – $18,200
19%$18,201 – $37,000$18,201 – $45,000
32.5%$37,001 – $90,000$45,001 – $120,000
37%$90,001 – $180,000$120,001 – $180,000
45%$180,001 and over$180,001 and over

As the changes are being backdated to July 1 this year, those earning $50,000 per year will get $1,080 back and those on $90,000 a year will get $1,215 back. Those on more than $120,000 will get $2,565 back. 

The impact on ‘rebatable’ employees 

If you work for an FBT rebatable employers (for example, a non-government school) the thresholds at which the General Living Expenses and Meal Entertainment salary packaging benefit becomes tax-effective may change.

Currently, savings can be achieved by employees earning above $37,000, but with more significant savings arising when earnings exceed $90,000. These thresholds will now change to $45,000 and $120,000 respectively. 


Low- and middle-income tax offset will stay for an extra year  

The Government will provide additional targeted support to low- and middle-income earners with a one-off additional benefit from the low- and middle-income tax offset (LMITO) in 2020/21. The additional one-off LMITO is worth up to $1,080 for individuals or $2,160 for dual-income couples. 


Multiple work-related portable electronic devices 

From 1 April 2021, businesses with an aggregated annual turnover less than $50 million will be exempt from FBT on multiple work-related portable electronic devices (such as phones or laptops) provided to employees. This measure will remove the limit of one per FBT year on such items. 


Superannuation guarantee 

The compulsory employer superannuation guarantee of 9.5% is legislated to increase to 10% on 1 July 2021. There were no announced changes in the Federal Budget 2020-21 to defer this increase (the rate is progressively increasing until it reaches 12% on 1 July 2025).