There’s no doubt that this year’s budget was designed to be completely different from the previous, with young families, small business and farmers the big winners.
Far from being controversial the announcement has in general been welcomed, with many commentator’s referring to it as the ‘have a go’ budget. Here’s a summary.
The government has set aside $3.5 billion to make child care more affordable through the introduction of a means tested Child Care Subsidy, replacing the childcare benefit/rebate. The government wants to encourage more people into the workforce, therefore an amount of child care hours subsidised will be “closely aligned” to how much time a parent spends working, training, studying or volunteering.
Superannuation and pensioners
Although there are no changes to superannuation, there is a range of measures for pensioners: This includes an increase in the assets test threshold for the age pension, whilst increasing the test taper phase-out rate. Terminally ill people will also have earlier access to superannuation.
$450 million has been set aside to boost national security by giving various intelligence agencies more resources. Money is allocated to boost the technological capabilities of Australia’s intelligence gathering agencies, train the new border protection service (the Australian Border Force) and for social media monitoring (to help counter the online extremist dogma of groups like Islamic State).
Money has also been set aside to help the telecommunications industry to comply with the new metadata laws (which forces telcos to store the metadata of their customers for two years).
The budget contains new initiatives in the “Jobs and Small Business” package, which applies to businesses with aggregated turnover of less than $2 million. It provides immediate deductibility for asset purchases up to $20,000, and a tax rate to 28.5%. Unincorporated entities can enjoy a 5% tax discount (capped at $1,000).
Farmers battling drought will get a lifeline, with $250 million set aside to continue the Drought Concessional Loan Scheme for one more year.
Other benefits for farmers include the ability to claim fences and new water storage as tax write-offs, as well as money will be made available to help farmers in drought-affected areas to lessen the impact of pest animals.
Road infrastructure for cattle supply chains in the north, a boost to infrastructure in drought-affected areas via the establishment of a new grants system and a portion to go toward extending social and community support services for an extra 20 local government areas. There will also be an extra $1.8 million for more counselors in rural areas.
Other budget highlights
- 30 multinational known tax-avoiders have been targeted to pay more tax in Australia.
- Backpackers will now pay 32.5% tax from the moment they arrive and earn in Australia.
- The so-called ‘Netflix tax’ will see the government set to profit from overseas businesses supplying digital products and services to Australians – these will be subject to GST from 1 July 2017. It is expected to raise $350 million for the states in the first two years.
- The current $41.1 billion deficit is projected to be reduced to $35.1 billion by 2015-16, falling to $6.9 billion in 2018-19.
Certainly, all budgets will rustle a few feathers, but overall, this is a cautious one. Perhaps this year we can expect an easier transition and less media attention over the coming 12 months.