2021 Federal Budget Wrap-Up
Last night, The Federal Treasurer Josh Frydenberg delivered this years Annual Government Budget. As is often the case in a potential election year, the budget was filled with a raft of spending measures to attempt to ease pressure on households, while at the same time continuing to stimulate the economic recovery from COVID-19.
There are very few people who would get any enjoyment out of reading the official budget papers or listening to TV economists to see how it impacts them, so I thought I’d offer a summary for you on the most relevant elements of the budget, in the areas that are most likely to impact you.
Personal Income Tax
The Government has continued its ‘low and middle income tax offset’ for the 2021-2022 financial year, meaning that there will be a continuation of the tax savings that were provided for the current 2020/21 financial. These can be worth up to $1,080 per person if you earn under $90,000.
Full Expensing Extension
The Government has also continued its ‘Full Expensing’ program (formerly instant asset write-off program) for businesses with turnover under $5b. This means that an eligible, depreciable asset can be fully written off and deducted. This is extremely beneficial for businesses looking to upgrade their vehicles, IT systems or buy plant and equipment.
Repealing the Work Test for Voluntary Super Contributions
The Government will now allow individuals aged 67-74 years to make or receive non-concessional or salary sacrifice contributions without meeting the work test, subject to contribution caps. The work test will still need to be met to make personal deductible contributions. As it currently stands, individuals in the above age bracket can only make non-concessional contributions if they are working at least 40 hours over a 30 day period in a financial year.
Reducing eligibility age for downsizer contributions
In an attempt to alleviate the pressure on the housing market, and assist with the transition into retirement, the Government will reduce the eligibility age of downsizer contributions from 65 to 60 years of age. This means that those aged over 60 can make one off, post tax contributions into super of up to $300,000 per person from the proceeds of the sale of their home, without counting towards their non-concessional contribution caps.
Child Care and Pre-Schools
The Government has announced a raft of incentives with regard to child care and pre-school, with the most notable being:
- Increase in child care subsidies available to families with more than one child under 5 in child-care by 30% to a maximum subsidy of 95% of fees paid for their second and subsequent children,
- Removal of the $10,560 cap on the subsidy,
- Funding provided to pre-schools with an attempt to lift attendance numbers
The Government will provide over $17.7b over 5 years as a response to the Royal Commission into Aged Care to improve the services. The main points of this are;
- Additional 80,000 home care packages to be made available
- Star rating system on the performance and quality of aged care providers to provide peace of mind for seniors and their families,
- Reforms to residential aged care to provide a government funded basic daily fee supplement of $10 per resident, per day and the implementation of a new refundable accommodation deposit support loan program.
While the budget itself contained additional measures, the above listed are the points and benefits that I believe will have the biggest impact on everyday Australians. Of course, all of the above measures must pass parliamentary process, but I wouldn’t expect there to be too many objections on the measures. In my opinion, whilst it is an ‘election-year budget’, I think there are measures of this budget that will provide significant benefit to many people and small businesses.
If you’d like to discuss any of the above points further, please don’t hesitate to contact me.
Have a great end to your week,
The information provided in this email must only be considered general advice. It has been prepared without taking into account any persons individual objectives, financial situation or needs. Before acting on anything in the article, you should consider its appropriateness to you, having regard to your objectives, financial situation and overall needs.