In delivering his second Federal Budget last night, Scott Morrison, Federal Treasurer, has committed to the principles of “fairness, opportunity and security”.
Bentleys’ team of tax experts has reviewed the budget in detail. Click here to read our full report on key tax and superannuation measures.
In brief, the Government is aware of electorate frustration and is keen to win popular support from this budget with measures that include a new big bank tax, infrastructure spending, employer levies for certain foreign workers, restrictions on foreign investment and tackling housing affordability.
Mr Morrison has acknowledged the pain that small business owners and wage and salary earners have had to endure over the past few years. He noted that the Government has had to live within its means and that the 2017 Budget was about making the right choices for better days ahead.
Mr Morrison announced a budget deficit of $29.4bn, slightly higher than expected. Even before the budget was announced he claimed that “things are beginning to look up” and the economy will be in surplus by $7.4bn in 2020-2021. However, getting to surplus will largely be achieved through higher taxes.
Like most budgets of modern times, many of the announcements came as little surprise because the amount of pre-budget chatter was considerable.
Some of the key tax changes include:
- The Medicare levy for all Australians increasing to 2.5% starting 1 July 2019;
- Housing affordability measures and tax saving measures for first home buyers including salary sacrifice and superannuation concessions;
- The $20,000 instant asset write-off for small businesses extending until 30 June 2018;
- The Government remaining committed to reducing the corporate tax rate as previously announced;
- Increasing the non-resident withholding tax on real property sales and reducing the $2m threshold;
- A new levy on foreign workers that is expected to raise $1.2bn; and
- The big banks will face a new levy starting 1 July 2017.
The Government is under pressure to perform. It believes it has delivered a budget that it can get past the Senate to address pressing national economic issues.