Budget in summary
2020 has been a year full of surprises, meaning we have all had to manage and adapt our financial decisions to cater for the unpredictable. Now the federal government has handed down the 2020-21 Budget which would normally be expected in May, and have a focus on removing the deficit and outlining a range of tax cuts and spending initiatives. The 2020 Budget is big! …and is aimed at creating jobs and boosting economic activity which includes tax relief and financial assistance for many Australians, including low and middle-income earners, business owners, young workers, and social security recipients.
While there’s plenty of media coverage and advice out there, breaking down what it all means for people of varying incomes and circumstances, can be complex to decipher. One of the many roles of our Westlawn Financial Advisers is to assist you in navigating the Federal Budget and understanding how it impacts you personally.
This year, instead of a surplus, the budget will see a record deficit of $213 billion this year, $112 billion next year, and $87 billion the year after that. The budget includes a raft of tax cuts (reportedly reaching more than 11 million Australians and backdated to the beginning of this financial year). This will mean more money in your pocket from the time this legislation passes, as well as some extra tax back when you lodge your return.
Any budget or forward estimate carries uncertainty and is based on a number of assumptions, which in this case may be considered overly optimistic, however it is important to be positive and know that we have done extremely well in managing the threat of COVID 19.
There are many areas that the Budget highlights and these include:
- Stage two tax cuts to be brought forward, these will reach a very broad group of employees and quickly, with a handy calculator available here to find out what you can expect to save
- The low and middle income tax offset of $1,080 will remain in place for the 2020/2021 financial year, and there will be an increase in the low income tax offset
- Exempting Granny Flat Arrangements from Capital Gains Tax (CGT) from 1 July 2021, subject to legislation
Support for businesses
- A wage subsidy will reimburse eligible businesses up to 50% of a new apprentice or trainee’s wages for up to 100,000 new workers
- JobMaker Hiring Credit will be available to eligible employers for each additional new job they create for an eligible employee aged 16 to 35
- Businesses with an annual turnover of up to $5 billion can write off the full cost of eligible capital assets acquired from 7 October 2020 and first used or installed for use by 30 June 2022
- Companies with an aggregated annual turnover of less than $5 billion will be able to apply tax losses from 2019-20, 2020-21, and 2021-22 income years against previously taxed profits from the 2018-19 and later tax years by claiming a refundable tax offset in the loss year
- The Government intends to grow the economy in 2021/2022 by creating job opportunities in sectors such as manufacturing, infrastructure, medicine, recycling, food, defence, farming, and tourism. There will also be a focus on increasing female workforce participation
- Small businesses with a turnover of up to $50 million will be able to access up to 10 tax breaks, with fringe benefits tax scrapped on car parking, phones or laptops, simpler trading stock rules, and easier PAYG installments
- Eligible aged pensioners, carers, disability support, and concession cardholders will receive two $250 cash payments. These payments can be expected from November 2020 and March 2021
- To help members avoid paying additional fees for multiple super accounts, employers will no longer create default super accounts when an employee joins their company
- By July 2021 MySuper products will need to do an annual performance test and notify members each year if their fund underperformed
- The Government will release an online comparison tool called YourSuper that will help members compare the fees and returns for super funds
- After much speculation, there has been no change to current Superannuation Guarantee payments
First Home Buyers and Housing Exemptions
- Extension of First Home Loan Deposit Scheme, up to 10,000 more first home buyers will be able to get a loan to build a new home or buy a newly built home with an increased cap on the purchase price
- To help look after vulnerable Australians, there will be additional funding for the National Disability Insurance Scheme, mental health and suicide prevention, and the Pharmaceutical Benefits Scheme
How we can help
A Westlawn Financial Adviser can assist you to improve your financial position by helping you to navigate legislative change as well as changes in market conditions, helping you to champion your own unique and highly personal financial goals.
At Westlawn, we are able to help to ensure you make the most of the budget and understand the measures that impact you.
During times of uncertainty, it is important to have a plan in place. A Westlawn Financial Adviser is able to help you to ensure you make the most of the budget measures that impact you, ensuring measures that work in your favour are directed towards achieving your financial goals.
Below is a nifty Budget Summary video by the Technical experts at MLC, that outlines the key Budget proposals and may help you to understand them a little better.
Information sourced from MLC, Bridge Coast Finance Group, Macquarie Bank, Colonial First State, The Adviser, and the Australian Government.
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