Australian Treasurer Josh Frydenberg today tabled the 2020-21 Federal Budget in the midst of COVID-19. The budget was initially slated for delivery in May, but was delayed due to the pandemic.
Further information here.
Budget overview
- The underlying cash balance in 2020-21 is expected to be a deficit of $213.7 billion, equivalent to 11.0 per cent of GDP.
- The budget position is expected to improve across the forward estimates to a deficit of $66.9 billion in 2023-24 and to further improve over the medium term to a deficit of $49.5 billion, equivalent to 1.6 percent of GDP in 2030-31.
- Net debt will increase to $703 billion or 36 per cent of GDP this year and peak at $966 billion or 44 per cent of GDP in June 2024.
- Australia’s economy is forecast to fall by 3.75 per cent in 2020 and unemployment to peak at 8 per cent in the December quarter.
- In 2021, the economy is forecast to grow by 4.25 per cent, and unemployment to fall to 6.5 per cent by the June Quarter 2022.
Tax relief for individuals
The Australian Government will bring forward Stage two of its Personal Income Tax Plan by two years. From 1 July 2020:
- the low income tax offset will increase from $445 to $700;
- the top threshold of the 19 per cent tax bracket will increase from $37,000 to $45,000; and
- the top threshold of the 32.5 per cent tax bracket will increase from $90,000 to $120,000.
The Government will also provide additional targeted support to low- and middle-income Australians. In 2020-21, low-and middle-income earners will receive a one-off additional benefit of up to $1,080 from the low and middle income tax offset (LMITO).
Tax relief for business
Businesses with a turnover of up to $5 billion will be able to immediately deduct the full cost of eligible depreciable assets acquired from 7:30pm (AEDT) on 6 October 2020 and first used or installed by 30 June 2022.
The Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid. Losses incurred to June 2022 can be offset against prior profits made in or after the 2018-19 financial year.
The Government is also providing $105 million in tax relief to expand access to a range of small business tax concessions by lifting the aggregated annual turnover threshold for these concessions.
The Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive.
JobMaker Hiring Credit
Businesses will receive a new JobMaker Hiring Credit for hiring younger Australians. The JobMaker hiring credit will be paid at the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35.
It will be payable for up to 12 months for each new job and is available from tomorrow to employers who hire eligible employees aged 16-35.
Economic support measure
Pensioners and other eligible recipients will receive two additional $250 economic support payments, the first to be provided from December 2020 and the second from early 2021.
Budget papers
Budget Paper No. 1: Budget Strategy and Outlook
Budget Paper No. 2: Budget Measures
Budget Paper No. 3: Federal Financial Relations
Budget Paper No. 4: Agency Resourcing
Budget speech
Transcript of Treasurer’s speech to Parliament
Portfolio papers
Ministerial statements
Regional Ministerial Budget Statement 2020-21 – Growing a Strong and Resilient Regional Australia
Budget Forum 2020
Looking for Bold Reform? Get Rid of Payroll Taxes, by Robert Breunig.
It’s Time to Meet Key Social Policy Challenges in COVID Recovery, by John Hewson.
Meet the Liveable Income Guarantee, a Budget-Ready Proposal That Would Prevent Unemployment Benefits Falling off a Cliff, by John Quiggin, Elise Klein and Troy Henderson.
COVID-19 Strengthens Australians’ Belief in the Fair Go, Government Should Support the Vulnerable, by Emma Dawson.
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