1. Small business growth

Recognising that small business is the powerhouse of employment and our economy. The government announced several supportive initiatives to stimulate growth.

Income tax rate for businesses less than $2m in turnover reduced to 28.5% and for sole traders a 5% reduction.
Capital gains tax relief on restructuring small businesses.
FBT reduction on use of electronic hardware to boost productivity.
Immediate tax deductions up to $20,000 for assets purchased for immediate use.

2. Support for new businesses

Thinking of starting a business? There will be more support to make it a success such as:

• Immediate tax deductions for professional assistance needed in setting up a business.
• Minimising red tape.
• Opening up crowd funding as a means to raise capital cheaply.

3. Social welfare support

It is no surprise that this will be the most contentious part of any government budget given how many people it impacts, its sheer size of all public spending and that Australia remains one of the most generous nations on earth in this respect. As tax receipts decline and our population both ages and remains flat overall, pressure will continue to grow in the decades ahead. This is the current government’s latest response to these factors:

The bad news…….

Those currently benefiting from the low income subsidy will see this removed from next year. Energy and carbon tax subsidies to remain.
Retirees in receipt of a Defined Benefit Superannuation Pension (mainly government employees and some large corporate employees) will see a cap on the income that is exempt from the Centrelink Income Test. Military and Veterans Affairs pension recipients will be demoted as recognition for their sacrifice and service to the nation.
The Centrelink Asset Test has both positive and negative changes depending upon individual circumstance.
Overall 170,000 receiving a part pension will no longer receive it. For those under retirement age they will immediately receive a health benefit card. A greater number however will see their total pension payment increased.
The Large Family Supplement Benefit of the Family Welfare Tax Benefit Part-A is to cease from July 2016.
Changes making it fairer to Australian tax payers…….

Families living overseas will see many welfare benefits cease or reduce.
Tertiary students that use/used government debt support then move overseas to work will be required to repay those loans quicker.
Paid parental leave double dipping (those on employer and government support) will see this fully taken into account in assessing eligibility.
Those receiving child care support and not working will see this reduced or removed.
The good news………

Proposed changes pre-budget on lowering Income Test thresholds will not proceed.
Asset test threshold will be increased helping those asset rich but income poor.
Mooted changes to how welfare pensions are increased each year will not proceed which is likely a net positive to recipients.
Widows will be excluded from the pension eligibility waiting period.

4. Child Care system to encourage people to re-join the workforce

Up to 85% of the cost of child care will be paid by the government.
This will especially apply to low income households but high income households over $180,000 will see support reduced.
Qualification thresholds will be indexed to inflation.
This new system will replace the current system from July 2017.
New home based carer support (up to $7/ hour) for those unable to access child care facilities.

5. Support for older Australians

Home care support and access greatly improved.
Restorative aged care places increased to help people’s mobility and confidence for an independent life.
Complaints handling toughened up to protect those in aged care homes.
Simplified access and information to all support available and for those caring for older Australians.

6. Support for working Australians beyond the self-employed

Medicare levy for low income households, families, singles and seniors increased meaning more money in the average persons’ pocket.
Work related car expenses improved and simplified.
FIFO workers way up north beyond the 38th parallel will lose eligibility for the special Zone tax rebate.
Temporary holiday workers to lose the income tax free threshold. This increases taxes to fund welfare for resident Australians.
Closing a loop hole that employees of charity and Not for Profits have in claiming meals and entertainment to only $5,000 in gross benefits. Anything over is subject to Fringe Benefits Tax.
Employees to gain fairer benefit from company share schemes as part of their remuneration from an employer.
Farmers who better prepare for drought and natural disasters will receive greater tax benefits in farm asset improvements.

7. Superannuation and banking

The biggest news is that there is no news. No tampering with the underlying structure. This reinforces the value of super to Australia’s future and the need for political tampering to be limited to underpin confidence for people to contribute to their future.
Unclaimed and lost super now easy to find and reclaim.
The time before a person loses their unclaimed super is being increased from 3 to 7 years.
Those suffering a terminal illness will be able to access their super up to 2 years before estimated death.
Children’s lost accounts can no longer be taken over and removed by the ATO.
So there we have it. Something for everyone. Tightening up on the fringes, less for the Middle class, debt being allowed to continue to grow, the really big issues not really addressed and special interest minority groups not taken into account. The nations Retirement structure left untouched and older Australians very much listened to and catered for. Child care and small business are government’s two fiscal initiatives to help grow the economy and lower unemployment.