This year’s budget saw a big bag of measures announced to get growth accelerating in the Australian economy. Some people and sectors will feel its impacts more than others.
Most groups in the Australian community look likely to benefit from this year’s Federal Budget in some way, assuming the measures are enacted (remember, the budget is not legislation). You can read our detailed analysis of that here. Some key call-outs include:
Taxpayers and lower income earners
The government announced a bring forward of the July 2022 tax cuts to July 2020. This will raise the start of the 32.5% tax rate bracket to $45,000 from $37,000 and raise the start of the 37% tax rate bracket out to $120,000 from $90,000 and increases the low income tax offset. It will mean tax cuts of $83 a fortnight for someone on $80,000 and $99 a fortnight for someone on $140,000 and refunds for higher tax already paid since July.
There is an ongoing push to stimulate consumer and household spending, which is good news for those companies on the receiving end. The tax cuts outlined above are part of this push. Household spending was the biggest drag on the June quarter data, falling by 12.1% over the period, so it’s important to get that moving again.
The government has got its eye on construction, and is targeting some housing support measures at new builds in this year’s budget. This includes extending the First Home Loan Deposit Scheme to provide an additional 10,000 guarantees in 2020-21. This allows eligible first home buyers to build a new home or purchase a newly constructed home with a deposit of as little as 5%.
This is in addition to the HomeBuilder scheme announced in June, which provides eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home.
Younger people and apprentices
The government has created measures to boost employment in Australians under the age of 35. This includes a new JobMaker wage subsidy tied to employing young people to partly replace JobKeeper and $1.2bn to subsidise 100,000 new apprentices.
Recessions can traditionally impact younger people more than others, and this one is unique in that much of the workforce remains at home, removing that additional element of connection and experience for young workers – particularly those in white collar industries.
It’s clear that the Federal Government is looking to boost business investment through this budget, evidenced in how it’s structuring incentives and concessions. For example, on 6 October the government announced instant expensing for tax purposes for any investment undertaken by businesses with turnover up to $5bn until 30 June 2022 and the ability to offset losses against previous profits to generate a tax refund. Further, it also announced a reinstatement of R&D tax breaks.
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