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.

Winners

  • 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

Losers

  • 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

Small Business

  • 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%

Superannuation

  • 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

Families

  • 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.