The Treasurer Josh Frydenburg released his 2nd budget as Treasurer on Tuesday night (5 months late) with a mantra on JOBS, JOBS and more JOBS plus business spending which they hope will create even more JOBS. We have JobKeeper and JobSeeker already – budget night they introduced some more terms JobMaker and JobTrainer. The budget, apart from jobs, is also very friendly for those under the age of 35.
The Treasurer talked about Australia’s biggest economic crisis since the Great Depression (our first recession in over 30 years) and how Australian’s have been tested like they have never been before with fires, floods and a global pandemic. He shared some worthy stats like 600 million job losses globally and an economic contraction globally of 4.5%.
Commentators and economists explained that they weren’t worried about the biggest deficit in decades (interest rates are so low) and the big assumptions in the budget papers like a widely available vaccine for Covid-19 by December 2021, a forecast of 4.75% growth in 2021/22 and whether people will actually spend the money they receive from the budget? They confirmed the budget is built completely on business and boosting business confidence.
Labor Shadow Treasurer Jim Chalmers outlined that they will support the tax cuts and will be inclined to support the other measures but they wanted bang for the buck based on the amount of spending the Government is doing. He was also concerned about the lack of support for those aged 35+ and on JobSeeker who are on the edge of a cliff when the extra JobSeeker support finishes.
Below is a quick snapshot of the Budget 2020.
- Deficit $213.7 billion
- Net debt $703 billion
- Economic growth 20/21 -1.5% then 21/22 +4.75%
- Unemployment is currently 7% and to peak at 8% next year
- No inflation – est 1.75% in 21/22
- JobMaker hiring credit – $200 per week for employees aged 16-29 and $100 per week for employees aged 30-35 – need to be an eligible employee working greater than 20 hrs and payment will be for 1 year
- Job Training fund & Apprenticeships – new wage subsidy for new trainees and apprentices of 50% up to $7,000 per quarter
- Instant asset write off on eligible assets from 6 October 2020 until 30 June 2022 – 99% of businesses will be able to use this
- Company loss carryback until June 2022 with a carryback to the 2019 year and later years – not available for any other entity i.e. trusts or sole traders etc
- Expanded access to small business tax concessions for businesses with turnover between $10m and $50m (immediate deductions, FBT exemptions, simplified trading stock, 2 year amendment period and GST simplification)
- R & D spend from 1 July 2021 – changing of tiers and caps depending on whether turnover is over $20m
- Expanded infrastructure spend for roads, rail, recycling and water
- Specific export market development grants from 1 July 2021
- Bringing forward 2022 tax cuts as announced in 2019 budget and backdating to 1 July 2020 by adjusting the thresholds for 19% and 32.5% brackets plus an adjustment to low income tax offset rebate – estimated that 11 million Australians will be eligible
- Expanding first home owner deposit scheme
- Expanding PBS and mental health services
- Social security – $250pp payment in December 2020 and $250pp in March 2021
- Aged care – extra home care packages and a new Disability Support for Older Australians
- Private health insurance – increasing max age of dependant from 24 to 31 and no limit for disabled dependants.
- Was all about fees and returns of super funds
- “Your Super” online comparison tool – from 1 July 2021
- Taking your current super fund with you when you move employers – from 1 July 2021
- Performance tests for MySuper products
- Spend on social housing
- Child care spend and support
- Money for the university sector and the job losses recently seen
- Support for the tourism sector who will probably be the last to recover
- Those aged 35+ on JobSeeker
- Structural long term tax changes
There is a lot in this Budget and as always a lot of fine print and prerequisites. For assistance in understanding the details or to find out how these apply to you and your business please talk to a member of the LBW team. Give them a call on 5221 6111.