The Treasury Laws Amendment (2021 Measures No. 4) Bill 2021 has been passed through both houses of parliament. This means that employers will be given an exemption from FBT if they provide education or training to a redundant, or soon-to-be redundant, employee for the purpose of assisting that employee to gain new employment.
This exemption will not extend to retraining provided under a salary packaging arrangement or to costs for which an income tax deduction is specifically denied, including Commonwealth-supported places at universities or repayments towards Commonwealth student loans.
The new measure will cover a range of scenarios related to redundancy, including where an employee is made redundant in one part of the employer’s business but is able to be redeployed to another part of its business. It also covers scenarios where the employer reasonably expects the employee to be redundant but has not yet been made redundant.
After making the announcement during the October 2020 Federal Budget, the Australian Government hopes that the measure will offer an incentive for employers to help their staff transition to their next career.
Targeted CGT exemption for granny flats
The Treasury Laws Amendment (2021 Measures No. 4) Bill 2021 also makes sure that CGT event doesn’t happen on entering into, varying or terminating a formal written granny flat arrangement providing accommodation for older Australians or people with disabilities.
For Australians who are wanting to access this exemption, the individual having the granny flat interest must have reached pension age or have a disability. The arrangement must be in writing and must not be of a commercial nature.
The measure comes after the Board of Taxation completed a review of the tax treatment of granny flat arrangements in 2019. Following the conclusion of the review, the board suggested that the government provide an exemption for all CGT events that are hypothetically capable of applying to granny flat arrangements.
Granny flats enable a family to care for an older or disabled family members. Yet building this second dwelling usually increases the overall value of the family’s home (their main residence) and, along with the rent gained from the relative living in the flat, prior to the new exemption the family previously had to pay capital gains tax on this gain if they later decided to sell their home.
Low- and middle-income tax offset
The passage of the recently passed bill also extends the operation of the low and middle income tax offset to cover the 2021–22 financial year.
The LMITO provides individuals with taxable incomes between $48,000 and $90,000 with a maximum offset of $1,080. Taxpayers earning less than $37,000 will see a benefit of up to $255.
The LMITO was first announced as a temporary measure in the 2018–19 federal budget and was meant to be removed when stage two tax cuts kicked in on 1 July 2020, but was retained in the wake of COVID-19.
The LMITO was then extended for one more year in May’s federal budget as Treasurer Josh Frydenberg stressed the need to further stimulate the economy. The latest extension will come at a cost of $7.8 billion.
Summary of The Amendments Made To Fringe Benefits Tax Assessment Act 1986
To provide employers with an exemption from fringe benefits tax if they provide training or education to a redundant, or soon to be redundant, employee for the purpose of assisting that employee to gain new employment; Income Tax Assessment Act 1997 to: extend the operation of the junior minerals exploration incentive for a further four years; and include a reporting requirement for mineral exploration companies where no exploration investment has occurred to enable unused exploration credits to be identified earlier and reallocated; Treasury Laws Amendment (Junior Minerals Exploration Incentive) Act 2018 to make consequential amendments; Income Tax Assessment Act 1997 and Income Tax (Transitional Provisions) Act 1997 to provide a capital gains tax exemption for granny flat arrangements where there is a formal written agreement in place; Corporations Act 2001 and National Consumer Credit Protection Act 2009 to provide that the Australian Securities and Investment Commission is not prohibited from making a product intervention order that has conditions relating to fees, charges or other consideration payable by a retail client or consumer in relation to a financial or credit product; International Tax Agreements Act 1953 to disregard days spent in Australia due to COVID-19 by New Zealand sportspersons on teams participating in cross-border competitions and their support staff in determining whether income derived from such competitions is taxable in Australia; and Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 to retain the low and middle income tax offset for the 2021-22 financial year.