If you were watching the budget live, or heard the synopsis the next morning, you would be right in thinking that it seems the Government is looking at ways to give money away. A budget like this has only ever been seen once before, and that was after a world war.

The good news is that there are mainly winners out there with some fast-tracked tax cuts as well as wage subsidies for younger workers and pensioners receive some extra cash for Christmas.

Please Note: Like all Federal Budgets, these changes are proposals only and will only come into effect if they are passed into law.

Superannuation Reforms: Proposed effective date: 1 July 2021

• Keeping one fund rather than multiple accounts: Rather than signing up for a new Super fund whenever members change jobs, an existing superannuation account will be nominated as their main account which reduces the likelihood of people un-necessarily having multiple accounts..
• Making it easier to choose a super fund: Super fund members will have access to a new interactive online comparison tool. The YourSuper Portal is designed to encourage funds to compete harder for members’ savings.
• Transparency around underperforming funds: To protect members from poor outcomes and encourage funds to lower costs, the Government will require superannuation products to meet an annual objective performance test. Those that fail will be required to inform members and refer members to the YourSuper comparison tool. Persistently underperforming products will be prevented from taking on new members.
• Additional trustee obligations: Super fund trustees will need to ensure decisions are made in the best financial interest of members and provide better information on management and expenditure.

Taxation

• Immediate tax relief: ’Stage two’ personal income tax cuts will be brought forward two years (and backdated to 1 July 2020). The tax cuts already legislated to commence from 1 July 2024 remain unchanged.
• Raised tax brackets:

• Boost for workers on lower incomes: The Low and Middle Income Tax Offset will be extended for a further 12 months until 30 June 2021, and there is a proposal for Low Income Tax Offset to increase from $445 to $700.
• Removing capital gains tax (CGT) for granny flat arrangements: The government is proposing to provide a CGT exemption for granny flat arrangements where there is a formal written agreement to provide accommodation for older Australians or people with disabilities. Proposed effective date: 1 July 2021

Support for pensioners, low income earners, welfare recipients and job-seekers

• Cash Boost: Aged pensioners, carers, disability support and concession cardholders will receive two $250 payments. The payments will be made progressively from 30 November 2020 and early 2021.
• Temporarily relaxing the Paid Parental Leave work test: The government is proposing to relax the work test for births and adoptions that occur between 22 March 2020 and 31 March 2021 to allow parents to qualify for the payment if they have worked in 10 of the last 20 months preceding the birth or adoption of a child.
• Incentives for employers to hire: A JobMaker Hiring Credit will be paid for a year to businesses who hire an eligible unemployed worker aged 16 to 35. The rate will be $200 a week for people under 30 and $100 a week for people between 30 and 35, and they must work at least 20 hours a week. The JobMaker Hiring Credit is aimed at filling the gap when the JobKeeper scheme ends next March.
• Support to businesses employing apprentices and trainees: A wage subsidy will reimburse eligible businesses up to 50% of a new apprentice or trainee's wages. Subsidies are capped at $7,000 per quarter, per eligible apprentice or trainee, capped at 100,000 places

Business tax changes

• Immediate tax write-off: Businesses with 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.
• Loss carry-back: Companies with aggregated annual turnover of less than $5 billion will be able to apply tax losses from the 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.
• Specific changes for small business: 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 instalments.

​First home buyers

• Purchase cap lifted: The Government will now increase the cap for the First Home Loan Deposit Scheme by another 10,000 applicants to help First Home owners enter the property market with a deposit of as little as 5% without lenders’ Mortgage Insurance. Note: there are a limits of what the property can be priced at that vary according to State and city. For more information please refer to my blog post What Can I Get as a First Home Buyer

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Any advice in this Federal Budget Analysis is of a general nature only. Before acting on any advice, you should consider whether it is appropriate to your objectives, financial situation and needs. Any tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlement that arise, or could arise, under taxation law. We recommend you consult with a registered tax agent.