5 key points from the Federal Budget 2020
The Government has handed down a budget 2020 in response to the economic crisis due to the COVID-19 pandemic. Here is the Federal budget summary with 5 key points at a glance.
1. Tax cuts
The Federal Government will bring forward tax cuts for middle income earners to be effective in the current financial year, two years earlier than originally planned, as well as a one-off tax benefit for low and middle-income earners. This is a great initiative putting permanent additional income in the hands of working Australians immediately. Any individual earning more than $37,000 will benefit from this change.
2. Asset write-offs
Businesses with a turnover of up to $5 billion will be able to have full instant asset write-off on eligible depreciable assets for businesses with a turnover of less than $5 billion purchased between 6 Oct 2020 and 30 Jun 2022. This is aimed at generating demand for larger purchases, which should in turn provide flow on effects to the broader economy.
Image source: 9News
3. Offset losses
Companies with a turnover of less than $5 billion will be able to offset losses incurred in the three financial years from 2019-20 to 2021-22 against profits made in or after 2018-19, rather than having to wait for future profits.
This seems a logical measure, which will help more companies stay afloat while impacts of COVID-19 remain prevalent. The Government also encourages companies to utilise this measure along with the above full expensing.
WHAT’S NOT INCLUDED?
4. Superannuation contributions
No change was announced to employer mandated superannuation contributions, which means the planned increase from 9.5% to 10% is still scheduled to commence from 1 July 2021.
There were a lot of rumours this would be deferred (or even abolished). The current schedule of increases remains with a 0.5% increase each financial year until the rate reached 12% on 1 July 2025.
There were no announcement relating to JobSeeker. Even when interviewed after the budget speech, the Government said they will review JobSeeker closer to the end of the year.
It was a reasonable expectation that some permanent and fundamental changes to JobSeeker would have been included in the budget. The base rate of JobSeeker amounts to less than $283 per week for a single person without children. This is just 35% of the minimum wage and inadequate to meet even the most basic living expenses in Australia.
The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
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