Federal Budget 2020-21 Overview

Some interesting points came out of the Federal Budget 2020-21, including proposed changes to personal and business taxation laws, superannuation and housing affordability. We will provide an overview of the most important proposed changes and find out how they could affect you.

 New proposed personal taxation laws

Firstly, the government has proposed bringing forward the planned tax cuts that were originally going to begin in 2022, leaving more money in your pocket each pay check. The idea essentially, is to give people the ability to be able to spend more money, that should in turn help stimulate the economy during the beginnings of this new recession we are heading into due to the pandemic. The proposed new taxation laws are as follows:

The Low and Middle Income Tax offset will only remain until June 30th 2021, while the increase in the Low Income tax offset from $445 to $700 is proposed to be brought forward to 2020-21 as well.

These proposed tax cuts being brought forward translate to $1935 extra in the hand for someone earning $45,000 per year, or $2295 extra in the hand for someone earning $90,000 per year. The legislated tax cuts from 2024 will incur far more savings per person but unfortunately for us, weren’t brought forward at all remaining unchanged.

 Additionally, there will be further economic support for people that are receiving income support and will receive two economic support payments of $250. These payments will be tax exempt and not count towards income for any income support payment. Eligibility requirements include people that already receive:

• Age Pension

• Disability Support Pension

• Carer Payment

• Carer Allowance (not already receiving the primary income support payment)

• Commonwealth Seniors Health Card

• Pensioner Concession Card (not already receiving the primary income support payment)

• Family Tax Benefit, including Double Orphan Pension

• Eligible Department of Veterans’ Affairs payment recipients and Concession Card Holders

Job-Keeper Payments have been extended for another six months until March 28th, 2021. The Coronavirus Supplement has been extended until December 31st, 2020 providing $250 per fortnight from September 25th, 2020.

New Business Proposals

There are many new support systems being put in place for businesses that will include:

• Businesses with annual turnover of less than $5 Billion will be allowed to deduct the full cost of eligible capital assets acquired and used or installed prior to June 30th, 2022.

• Businesses taking on new apprentices may qualify for a 50% wage subsidy

• Businesses taking on new employees may be eligible for the new JobMaker Hiring Credit that will be available for 12 months from October 7th, 2020 for each new job created to support the younger workforce. It will consist of $200 per week for each new employee aged between 16-29 and $100 per week for each new employee aged between 30-35.

Housing Affordability

An additional 10,000 first homeowner grants will be available with as little as 5% deposit for loans for the purchase of a new build or newly built home lasting until June 30th, 2021. Additionally, The HomeBuilder Scheme for existing owner occupiers, may qualify for a grant of $25,000 to build or renovate an existing home. These grants will endeavour to help support the construction industry while also promote home ownership for all Australians. 

Superannuation

New Laws for superannuation funds will provide people with the ability to maintain membership in their current fund even when changing jobs to minimise the occurrences of having multiple accounts. The government will also be scrutinising underperforming funds by conducting rigorous testing to ensure they remain productive for their members and provide the best returns possible.

 A new government online tool for employees called YourSuper Portal will provide assistance in choosing the right fund for you and will include:

• Super product rankings that show their associated fees and investment returns

• Links to the relevant super funds to provide ease of access to each fund

• Shows current accounts and encourages the consolidation into one account when you have more than one.

Overall the results of the Federal budget 2020-21 and the proposals made will benefit us all immensely. Not only by stimulating the economy in a way that could bring us out of the recession sooner, but also by providing more ways for us as individuals to increase our likelihood and our ability to continue to strive for the goal of financial independence.

If you had any further questions or wanted to discuss how we can help your financial situation contact us today to book your complimentary consultation - 0423 313 486 or kate@solacewealth.com

Kate Trost

Senior Financial Adviser and Director of Solace Wealth Management (AR numbers 465078/1262350)

Authorised Representative of Avana Financial Solutions (AFSL 516325).