In its 2021 budget, Australia extends temporary corporate tax measures it introduced in the 2020 budget and introduces certain other tax measures that may affect multinational corporations. This budget, which was tabled on May 11, 2021, temporarily allows certain businesses an extended 12-month period to carry back losses and fully expense eligible depreciable assets. The budget also extends the junior minerals exploration incentive for four years to June 30, 2025, among other changes.

Extension of company loss carry-back and temporary full expensing

The budget temporarily extends the loss carry-back measures introduced in the 2020 budget by 12 months to June 30, 2023. This extension allows eligible corporate tax entities with an aggregated turnover of less than AUD $5 billion to carry back tax losses arising in the 2022-23 income year to offset previously taxed profits in the 2018-19 or later income years.
The budget also temporarily extends full expensing of eligible depreciable assets for certain companies with turnover of up to AUD $5 billion for 12 months to June 30, 2023.

Intangible assets effective life changes

The budget will allow taxpayers to self-assess the tax effective lives of eligible intangible depreciating assets acquired from July 1, 2023, including patents, registered designs, copyrights and in-house software. This measure is intended to allow businesses to adopt a more appropriate useful life for their intangible assets.

Extension to the junior minerals exploration incentive

The budget extends the junior minerals exploration incentive for four years to June 30, 2025 (previously scheduled to expire on June 30, 2021). This incentive allows eligible greenfield mineral explorers that have raised capital in an income year to forego a portion of their tax losses generated in that year in exchange for tax credits, which can be distributed to investors.

Updated list of EOI countries and further focus on tax treaties

The budget notes the government will add six countries to the list of jurisdictions that have an effective information sharing agreement with Australia. Residents of listed jurisdictions are eligible to access the reduced Managed Investment Trust (MIT) withholding tax rate of 15% on certain distributions.
The budget also commits to provide funding to facilitate on-going tax treaty negotiations.

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Information is current to May 17, 2021. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500