By Darren Withers

The Federal Treasurer has announced the budget for FY 20/21. It’s notable as the first budget released during a recession in a generation.  As expected, it included significant stimulus, designed to boost our economic recovery, with almost $100 billion of new expenditure.  Some of the major announcements included;

Personal Taxation

Forecast to cost $17.8 billion, the government has planned to bring forward its stage 2 tax cuts into the 2020/21 year.

• The threshold at which the 37% tax rate kicks in will be lifted from $90,000 to $120,000
• The threshold under which the 19% tax rate applies will also be lifted from $37,000 to $45,000.
• The low income tax offset will increase from $445 to $700. It will be phased out at 5 cents per dollar for taxable income between $37,500 and $45,000.  It will be further withdrawn at a rate of 1.5 cents per dollar between $45,000 and $66,667.
• These changes will mean reduced tax of $1,080 pa for someone earning $85,000 and $2,430 pa for someone with a $120,000 income.
• Additionally, the low and middle income tax offset will be retained for a further year, providing those with incomes of between $48,000 and $90,000 a rebate of up to $1,080.

Superannuation

While the government refrained from making any significant changes to super, they have proposed several changes as part of the “Your Future, Your Super” package, aimed at improving efficiency and outcomes in the superannuation sector;

• In an attempt to prevent multiple accounts and reduce lost super, measures will be put in place to help ensure a person’s super account will follow them to a new job, rather than a new account being created.
• Super funds will be required to meet annual objective performance tests. Funds that fail will need to notify members and persistent under-performers could be prohibited from taking on new members.
• Super funds will also need to hold annual member meetings, and provide better information on how members’ money is invested and spent.

Social Security & Aged Care

• Pensioners, the unemployed and health care card holders are set for further handouts, with $250 payments to be made in December and March.
• Funding of an additional 23,000 new home care packages for elderly Australians.
• Older Australians with a disability who cannot access the NDIS will be able to seek help from a new program.
• Adult children will be able to stay on their parents’ private health insurance until age 31.

Business

A significant amount of expenditure has been directed toward tax breaks and incentives programs for business;

• The government will extend immediate write-off provisions, allowing businesses with turnover of less than $5 bn to deduct the full cost of eligible capital assets. This will apply until June 30 2022.
• While Jobkeeper is still proposed to end in March, a range of incentives will be provided to business to hire new staff.

For further information on how these changes could impact you or your clients, please email us or call 1300 ELSTON.