The Budget 2020-21 was handed down on 6 October 2020 and contained significant measures in response to COVID-19.

The following stimulus measures are considered to be relevant to NTER entities that satisfy the eligibility criteria for these measures:

Temporary loss carry-back regime

On 6 October 2020 as part of the 2020–21 Budget, the government announced that it will target support to businesses and encourage new investment through a loss carry back regime.

NTER entities with an aggregated turnover of less than $5 billion in a relevant loss year can carry back tax losses incurred in the 2019-20, 2020-21 or 2021-22 income years and apply these losses to a prior year’s income tax liability in the 2018–19, 2019–20 and 2020–21 income years. Eligible NTER entities that paid tax in prior years from 2018-19 will have the option of utilising their current tax losses incurred from the 2019-20 to 2021-2022 income years rather than carry them forward as a deduction for future income years.

The tax losses can be carried back to be offset against previously taxed profits from 2018-19 to generate a refundable tax offset which can be claimed when NTER entities lodge their 2020-21 and 2021-22 income tax returns.

This measure is subject to limitations on the amount of refundable tax offset that can be claimed and the integrity rules.

More information and the eligibility criteria on this measure is available on the ATO website.

Temporary full expensing incentive

NTER entities with an aggregated turnover of less than $5 billion are able to deduct the full cost of eligible depreciating assets that are first held, and first used or installed ready for use for a taxable purpose from 7:30pm AEDT on 6 October 2020 to 30 June 2022.

Eligible NTER entities are also able to deduct the full cost of improvements to these assets and to existing eligible depreciating assets made during this period.

Temporary full expensing also applies to eligible second-hand assets for small and medium sized NTER entities (with aggregated turnover of less than $50 million).

If an asset is not eligible for temporary full expensing because it was acquired before 7:30pm AEDT on 6 October 2020, the enhanced instant asset write‑off measure will continue to apply. NTER entities with an aggregated turnover of less than $500 million can deduct the full cost of an asset up to $150,000. The budget also extended the time which the asset must be first used or installed ready for use to qualify for the enhanced instant asset write‑off by a further six months until 30 June 2021 (from 31 December 2020).

Aggregated turnover

To access the above measures, the modification to the meaning of ‘aggregated turnover’ pursuant to section 328-115 of the Income Tax Assessment Act 1997 in paragraph 125 of the NTER Manual can be applied to NTER entities. The meaning of aggregated turnover of an NTER entity will not include the annual turnover of the State or Territory government, and annual turnovers of non NTER entities connected with the State or Territory government. In calculating an NTER entity’s aggregated turnover, this will also not include amounts pursuant to subsection 328-115(3).

More information

More information and the eligibility criteria on this measure is available on the ATO website.