The lowdown on Scott Morrison’s 2016 Budget
Scott Morrison has delivered his first budget as federal treasurer. It has a broad focus, is uncontroversial and with no obvious election sweeteners. Above is a 2 minute summary by our very own Ray Jaramis and below is a quick breakdown of the most important points.
The focus is jobs and growth, with incentives for small business and some claw back of superannuation benefits.
The deficit is projected at $37b, reducing to $6b by 2020 and balanced in 2021.
- Small business tax rate for companies to reduce by 1% to 27.5%, with reductions over coming years to bring down to 25%
- Program to get unemployed youth trained and into the workforce, contributing to the economy called PaTH
- Individual income tax payers see the threshold at which 37% cuts in increased from $80,000 to $87,000, a benefit of $315 pa
- Changes to the work test for those aged between 65 and 74 to make contributions to super more accessible
- Low Income Spouse Offset back to encourage super contribution particularly for women after having children
- No change to negative gearing, making the struggle for first home buyers a continuum
- No changes to the highest marginal tax brackets
- Smokers to see increases of 12.5% per year for each of the next 4 years
- Reduction in public service job numbers, aimed at saving $500m a year
- Clean up of the disability support pension, mainly aimed at those rorting
- Changing the definition of a small business to be those up to a turnover of $10m (up from $2m)
- Company tax rate down to 27.5% (from 28.5%), reducing further over coming years to 25%
- Unincorporated entities (individuals, partnerships, trusts) to have increased small business tax concession of 8%, up from 5%
- Reduction in concession contributions limit to $25,000
- Limit on tax-free pension account balances to $1.6m
- Expanded deductibility for personal contributions
- Lifetime non-concessional contribution limit of $500,000
- 30% tax on contributions for those on incomes above $250,000
- Medicare rebate freezing at $37, possibly forcing doctors to introduce co-payments
- $1,000 free dental for children axed
- Prescription subsidy changed to increase the cost to $5
- Reduction in Gonski funding to affect education
There’s no guarantees that the Budget will pass, with Labor and the Greens already making their intention to vote against a number of the measures known.
Time will tell.