What's in it for you!
The Australian government’s budget for the current financial year is expected to have a small surplus of $4.2 billion due to strong employment and better-than-expected wage growth. However, in the following years, a structural deficit is expected, which will lead to a deficit of $13.9 billion in 2023/24 and around $35 billion in the out years of the forward estimates. The budget focuses on the cost of living measures, including $14.6 billion on energy bill relief, Medicare bulk billing incentives, Jobseeker increases, rent assistance, and improving aged care services. Key revenue measures include increased collections from the PRRT, tobacco excise, and previously announced reductions in superannuation concessions. The impact on the economy is expected to be broadly neutral, and little implication for monetary policy is foreseen in the near term.
Small to Medium Business
Little was offered to Small Businesses however, they have received substantial tax relief in prior years with the introduction of Covid stimulus measures such as asset write-off measures. The budget includes a $20,000 instant asset write-off for small businesses, a new Small Business Energy Incentive, and $23.4 million to support small businesses in building resilience to cyber threats.
The Labor Government has announced various measures aimed at reducing the cost of living and improving the welfare of those in challenging situations, in addition to a small surplus – the first in over a decade. The proposed changes to personal taxation only include the annual indexation of the Medicare Levy threshold, which exempts low-income individuals from paying the levy. This increases the family threshold to $40,939 plus $3,760 for each dependent child, the single threshold to $24,276, the senior’s threshold to $53,406, and the family, senior or pensioner threshold to $53,406. To alleviate the burden on low-income households, eligible small businesses and those on JobSeeker, the Labor Government has proposed several measures. Low-income households will receive up to $500 off their power bills from 1 July 2023, while JobSeeker recipients will receive an additional $40 per fortnight from 20 September 2023. Those over 55 on JobSeeker will receive $92.10 more per fortnight, currently reserved for those over 60. Single parents will receive the single rate of Parenting Payment until their youngest child turns 14, compared to the current age limit of 8. Eligible single parents will also have more generous earning arrangements compared to JobSeeker. The Commonwealth Rent Assistance maximum rates will increase by 15%, benefiting a wide range of social security recipients. Eligibility for the First Home Guarantee and Regional First Home Guarantee will be expanded, and a range of energy-saving initiatives will be available for existing homeowners. The Parental Leave Pay and Dad and Partner Pay will combine into a single 20-week payment, and a family income test of $350,000 per annum will see nearly 3,000 additional parents eligible for the entitlement each year. The Government has also committed to increasing Paid Parental Leave to 26 weeks by 2026. Regarding superannuation, earnings on balances exceeding $3 million will be taxed at a higher rate of 30%, and employers will be required to pay superannuation contributions at the same time as wages from 1 July 2026, to increase compliance with superannuation legislation. For investors, the government will make significant investments in renewable energy and decarbonization and implement a global and domestic minimum tax rate of 15%. It’s important to note that all proposed measures need to be drafted and passed through both houses of Parliament before taking effect.
The budget includes significant funding for biosecurity, agricultural sustainability, animal welfare, and a National Soil Action Plan. There is also funding for a new National Net Zero Authority, as well as measures to support the cost of living pressures, including relief for electricity bills, increases to certain welfare payments, and expanded eligibility for the First Home Guarantee and Regional Home Guarantee. However, there are concerns about the implications of the increase in the Heavy Vehicle Road User Charge rate for transport costs, particularly for the agricultural sector. The government’s infrastructure pipeline will also be subject to an independent strategic review. Regional GPs will receive higher payments than metropolitan GPs, and the eligibility criteria for the First Home Guarantee and the Regional First Home Buyer Guarantee have been expanded