COVID-19 Response: Taxation and Social Assistance Urgent Measures bill is changing the provisional tax threshold. Which is a welcome news for many small businesses.
This measure would permanently increase the residual income tax threshold for being required to pay provisional tax from $2,500 to $5,000. As a result, provisional tax payments throughout the year will no longer be required. This would assist with the cashflow. Amendment apply from 01-04-2020
For example, if the tax liability for year 2019-20 was $10,000 but for the year 2020-21 is estimated to be half only $5000, then no tax payment is required until 07-02-2022.
This measure will assist many small income earners. For example, if your taxable income is about $34,000(sales less expenses) then your tax bill will be deferred till Feb-2020. This measure will also help individuals who work full time and pay tax on rental income. They will also be able to defer their tax bill until such time. As you can see the intended benefit is for only very small business owner. The Government expect the proposed measure would remove around 95,000 taxpayers from the provisional tax regime.
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