Tax cuts, wages subsidies, large-scale infrastructure spending, an extension to the asset write-off scheme and reforms to superannuation were just some of the measures contained in the 2020-21 Federal Budget announced by Treasurer Josh Frydenberg last night.
In what is undoubtedly the most important budget in living memory, the Government will be hoping that it sets the Australian economy on a course to recovery with the country experiencing its first recession in 30 years.
The extensive spending outlay will see the Budget deficit for 2020-21 balloon out to $213 billion, with net debt projected to reach over $703 billion. Headline measures announced include the following:
- Bringing forward tax cuts for low- and middle-income earners and backdated to July 1 this year;
- A $200 per week wage subsidy for an employer who takes on a worker aged below 35 who is currently on JobSeeker;
- A $1.2 billion package to employ 100,000 new apprentices and trainees;
- Instant asset write-offs of any amount for businesses with a turnover of up to $5 billion;
- $10 billion allocated in infrastructure spending, including $7.5 billion in road and rail projects spread across all states and territories;
- Companies will be able to use losses incurred to June 2022 to offset against prior profits made in or after the 2018-19 financial year;
- $1.5 billion in manufacturing reforms; and
- Reforms to superannuation accounts that will see accounts follow workers when they change jobs and poor performing funds being unable to take on new members.
Will the budget pass the senate?
The Government requires 39 votes (out of 76 Senators) to pass measures in the senate. Currently, the Coalition has 36 Senators, meaning they need to acquire the support of at least three crossbenchers to pass legislation if the Opposition votes against any measure.
Given the historic context in which this Budget takes place, it is unlikely that Labor will look to put up too many roadblocks. In all likelihood, the Budget will pass as an omnibus bill with little opposition.
If you require any further information on announcements contained in the Budget, then please don’t hesitate to contact your SAS Group consultant.