Australian Federal Budget 2021/2

CIA tax’s review: Australian Federal Budget 2021/2

“Securing Australia’s Recovery”

Anyone else remember the good old days when it was exciting to wait expectantly for the Federal Budget to be released wondering what surprises good and bad there would be?

Well, 2021/2 was pretty much leaked/announced in the days prior and again last night was as boring as bat (even for us Chartered Tax Advisors!) to tune in to…

Big spending, big debts and no surprises which was pretty much a certain in an election year and a continuing pandemic recovery.

Tax cuts were left in place, as was superannuation guarantees and the ATO has been held back in pursuing struggling businesses. Steady as she goes, keep the businesses running, employing and the people spending. 

“Net debt will increase to $617.5 billion or 30.0 per cent of GDP this year and peak at $980.6 billion or 40.9 per cent of GDP in June 2025 This is low by international standards. As a share of the economy, net debt is around half of that in the U.K. and U.S. and less than a third of that in Japan.  Consumer sentiment is at its highest in 11 years. Business conditions reached record highs and more Australians are in work than ever before”

One thing they didn’t harp on about (and what saved us last time during the Howard years) is it appears, we are on the cusp of an extended resources / mining boom as the global economy fires back up on inflated incentives of all kinds. We Australians really have won the lottery of life.

Macro, there seems to be a growing diversion in economic realities. We either go bust on debt, or we go super boom and hopefully deflate debt. It is getting harder to see a middle ground between the two polar opposites unless of course its decades (doldrums) of low inflation/interest rates and there’s no will or policy for that!

Housing nearly always gets some love with first home owners and single parent guarantees to help people get on board.

Superannuation with further good news.

  • The super contribution works test for those aged 67 to 74 is to be abolished from 1/7/22
  • Downsizer super contributions restrictions from 1/7/22 get even easier also with an age restriction reducing to above 60 the take up of this will be far more attractive.
  • The $450 minimum per month super contribution is being removed from 1/7/22 a good thing for casual workers a pain for micro employers (administration).

The question has to be asked, why wait to 1/7/22 for these measures? 

Biggest news once again is in supporting business:

Mr Frydenberg announced the government would be extending temporary full expensing and temporary loss carry-back (to the year 2019) for an additional year until 30 June 2023.

Further, Mr Frydenberg said the government will deliver more than $16 billion in tax cuts to small and medium businesses by 2023-24 with around $1.5 billion flowing in 2019‑20. This, he said, “includes reducing the tax rate for small and medium companies, from 30 per cent in 2014‑15 to 25 per cent from 1 July 2021″.

Well, that’s the 2021/2 highlights and there are plenty of other lesser budgetary gems that can all be found here: https://budget.gov.au/index.htm or contact the team at CIA tax.