Federal Budget: Winners & Losers
With the end of the financial year approaching soon, the Federal Government recently outlined its budget. Apart from a few industries, the Government tried to provide some incentives for everyone.
We thought we would have a look at the winners & losers from this year’s Federal Budget…
Winners:
1. Aged Care. The government is putting in an extra $3.5 billion a year into aged care over the next 5 years. The money will be spent on 80,000 new home care packages where there has been a substantial waitlist that needs to be cleared. The government has also provided money to mandate the “care minutes” of aged care residents whereby providers will be required to provide 3 hours & 20 minutes of care per day (per resident). There will also be a new basic daily fee supplement of $10 per resident per day.
2. Child Care. This budget saw the government announce they are putting an extra $1.7 billion into Child Care over the next 3 years. The main measure is the annual cap on households with an income of more than $189,390 will be abolished.
3. Taxpayers. There is an extension to the Low- & Middle-Income tax offset meaning individuals earning up to $90,000 will get a tax offset for this & next financial years. There are also slight changes to the Medicare threshold for low-income taxpayers, removal of the exclusion of the first $250 in self-education expenses and some changes to superannuation that will affect retirees in particular (abolishment of the $450 per month income threshold, removal of the work test for super contributions (people aged 67 to 74), enabling 60-65 year-olds to make tax-free contributions to super from the sale of their homes & relaxing the residency requirements for SMSFs.
4. Businesses. The highlight is the continuation of the asset write off for businesses with a turnover of up to $50m. That has been extended for a further 12 months. SMEs (with a turnover of up to $10m) can also apply to pause or modify ATO debt recovery actions where debt is disputed through a special tribunal as opposed the court system that will save time & fees. Employee Share Schemes have also been changed to make it more attractive to have staff own equity in a business. Company tax rate changes will be reduced to 25% (from 26%) from 1st July 2021.
5. Farmers. As noted in the Taxpayers section, farmers will benefit from the instant asset write-off extension which has been popular with farmers. There is $200m for a National Soil Strategy including rebates for farmers that share the results of soil testing & $370m for biosecurity measure to stop the spread of pests & diseases. An additional $60m will be spent looking at ways to reduce emissions through livestock feed & soil management. The government also announced it will waive around $15m in debt owed by more than 5,000 farmers receiving the Farm Household Allowance from Centrelink.
Losers:
1. Renewables. There was no announcement of funding for renewables in the budget apart from $30m for a project in the Northern Territory. There is $643.4m allocated to low emissions technology including some funding for two clean energy schemes.
2. International Tourism. Unfortunately for the tourism sector its unlikely that our International borders will reopen until at least mid-2022. The government is aware of the stress that this will cause our major tourism destinations and there may be some money dedicated to those areas as well as continued incentives for individuals to travel domestically.
3. Universities. The higher education sector is going through a tough phase at the moment with the international borders unlikely to open for another year meaning limitations on international students returning as well as required hotel quarantine for those arriving from overseas. The government did not announce any funding for universities who have shed a significant number of staff over the past year or so. International students may seek to enrol with universities in other countries where their borders are more open & less restricted.
We hope that this year’s budget will have a positive impact on your back pocket.