It was undoubtedly a pleasant surprise to see the government has more money in its coffers than anticipated – almost $7 billion more. More people are employed, consumers are spending their hard earned money and companies are being run effectively.
Undoubtedly the headline item from the budget is tax relief for individuals by lifting the 32.5% tax bracket to $90,000 from 1 July 2018 and the Government’s announcement of its intention abolish the 37% tax bracket in 2024-25. In the 2022-23 financial year we will also see the Low Income Tax Offset increased to $645 and the 19% tax rate from $37,000 to $41,000.
📷
As advocated by Tax & Super Australia, we have also seen the retention of the $20,000 instant asset write off. Whilst it is not permanent – it has only been extended by another year to 30 June 2019 – we welcome this change.
The Government also proposes to amend the research and development (R&D) tax incentive to better target the program and improve its integrity and fiscal affordability in response to the recommendations of the 2016 Review of the R&D Tax Incentive.
Health & aged care was a key focus for this announcement. In the build up to the budget, we heard that there will be no increase to the Medicare levy, as the National Disability Insurance Scheme (NDIS) has been funded from other sources of revenue. Whilst we do not know the exact details of where this extra money has been found, the abandonment of this proposed increase is certainly welcomed. The Medicare rebate is increasing by 55¢ for a visit to the GP after a four year freeze and the Royal Flying Doctor Service given an additional $84 million to expand its services.
The Government is also tackling the “sin” taxes in this year’s budget. After crackdowns in recent times on the black economy, the Government’s next project to recoup lost revenue is to establish a tobacco taskforce – expected to raise an additional $3.6 billion in additional revenue – to crack down on the “chop-chop” tobacco trade. With regards to alcohol, the excise charged on craft beer kegs over eight litres will be equalised. This is intended to level the competition between small craft breweries and large multinational beer producers.
We have also seen a $24 billion infrastructure package that funds key transport projects all around Australia – with commitments to road and rail in Western Australia ($3 billion), an airport rail link for the Melbourne airport in Victoria ($5.1 billion) and the Sydney freight rail ($400 million). It is also heartening to see the Government commit half a billion dollars to protect the Great Barrier Reef – one of the seven wonders of the natural world and a key tourist destination – from pollution and climate change.
With a federal election looming on the horizon, this was always going to be a budget that didn’t rock the boat too much – and aimed to curry favour with the voters. The battle lines for the next federal election, certainly in regards to tax, are being well and truly drawn.
David Ebdon
Winners and losers Individuals Business Superannuation Health / Aged care Infrastructure Tax administration
# [budget], [federal budget]
Comments