On Tuesday 12 May 2015 the Federal Government released their 2nd federal budget. The treasurer stated the budget was “responsible and measured” and was all about “small business, fairness and families”.
The Federal Government has revised its budget deficit projections and GDP growth over the next 4 years. The deficit will reduce from $35.1b to $6.9b in 2017/18. GDP will run at 2.5%, 2.75%, 3.25% and 3.5% over the next 4 years.
The budget was a bit surprising to most people with some of comments being “transformation from last year”, “diametrically opposed to last year”, “apology from last year”, “all about salvation” and its an “election budget”.
The opposition stated that they will support certain parts of the budget but don’t think it helps Australia’s short term future and building confidence. Note the below announcements may or may not be passed by the Government, as we saw last year.
As expected there were no major announcements in relation to tax reform which will become a major part of their tax policy for the next election.
The major parts of the budget include:
- Small business tax cuts from 1 July 2015 from 30% to 28.5% for companies. If the small business doesn’t trade through a company there will be a 5% discount up to $1000 for unincorporated businesses. Small businesses will also get an immediate tax deduction up to $20,000 for 2 years for asset purchases.
- From 1 April 2016 fringe benefits tax will be abolished on mobile phone and tablets.
- The Child care subsidy will be changed effective from 1 July 2017 which will be indexed and include an activity test. Paid parental leave schemes will be adjusted so that individuals will be not be entitled to receive a private scheme as well as the government scheme.
- More drought relief subsidies will be provided to farmers with immediate tax deductions for certain expenses such as fencing and water facilities.
- Major changes for age pension entitlements from 1 January 2017 for pensioners which include an increase in the lower threshold for the assets test to allow more pensioners to get the full pension but also a decrease in the upper thresholds so that less well off pensioners will receive the part pension – eg home owner couple upper threshold reduces from $1.15m to $823,000
- Tax changes announced were minimal with the major changes attacking multinationals through the “Google tax” and the “Netflix tax ” from a gst point of view. However there were some changes affecting individuals including changes to the zone rebates which will affect FIFO workers, limiting fringe benefits for health and not for profit workers, changing the way that car work related expenses are claimed and chasing HECS and HELP debts from overseas graduates.
- National security was also a major winner from the budget including $1.2b supporting the war on terror and boarder protection.
- The government will also introduce a new Northern Australia infrastructure program for additional money for ports, rail and roads.
- The government will also decrease the waiting times for youth unemployment benefits and allow the restart program for older Australians to commence earlier.
We recommend that you obtain further information on any of these items if they are of interest to you, as the above is only a brief summary.