The Federal Budget

The federal budget was released last night and was called the “have a go budget”. There was tax breaks for small businesses and help for working parents.
If this years budget was like last years, then the prospects of some of the items making it through the Houses of Parliament is not great.

The 2014 budget was supposed to stimulate the economy. The general consensus is that if the world wide economy does not remain rosy, the government will not achieve the goal of being in surplus. There was nothing in the 2015 federal budget to suggest a strategy to get out of federal deficit. As it stands in 2014 the government were not helped by the economy as a result of the following areas:

  1. The average wages not growing at the same rate as compared to previous years
  2. Increasing unemployment
  3. The mining industry suffering
  4. The drop in the iron ore price
  5. Ongoing economic concern in Europe and China.

The inability to return to a surplus amount is in some way due the budget cuts from last year not making it through the Senate.

Here are some of the announcements made last night:

Families

If your a parent staying at home there is not much In the budget for you as the government are trying to encourage young parents to return to work. However the winner here is working parents who will receive extra benefits. The aim being to make child care more affordable.

Even if your household income is high, that is over $185,000 you’ll receive more assistance and if your household income is up to $165,000 you’ll be $30 better off. While there is protection for low-income earners, those whose family income is above $165,000 per year will no longer be eligible for any childcare assistance.

Aged Pension

There is some help regarding the taper level on the assets test for some pensioners, however the threshold for the assets test has been adjusted. The Government announced it will adjust the thresholds for assets tests on the pension. This will impact 172,000 pensioners at the lower end of the pension and they will be better off. Unfortunately, 81,000 pensioners who currently claim the part pension will no longer be eligible.

The Government confirmed these changes would replace efforts to change the way the pension was indexed, which would have negatively impacted pensioners more over the long period.

Small business

If your business has an annual turn offer of less than 2 million , then there is some really good news.

What used to happen is you bought an asset and could claim up to $1,000 per item on depreciation. It would take you many years to get the full depreciation benefit. Now any purchase for an asset of less than $20,000 as of 7:30pm on budget night and June 30, 2017, are now claimable.

To be eligible, your business needs to demonstrate ongoing activity on business activity statements.

The other great thing to come out of the budget was a reduced rate of tax. Companies with annual turnover of less than $2 million will have their tax rate lowered, from 30 per cent to 28.5 per cent. This is the lowest small business company tax rate in almost 50 years.

Business such as sole traders, partnerships and trusts, will also get help. They will receive a 5 per cent tax discount from July 1 up to $1,000 a year.

The best thing you can do is take action. If you fill in our to minute form but indicate you are looking for help from an accountant or financial planner, we can make sure you speak to a financial planner who is also an accountant or works very closely with an accountant. What have you got to lose?