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Announced Tuesday night, Scott Morrison and Malcolm Turnbull’s budget is on the tip of everyone’s tongue. The budget shows that Australia will continue in deficit over the next four years, yet also asserts that Australia is growing rapidly. If you’re not sure how the budget affects you or your business, here’s a breakdown of the impacts of the budget on businesses and individuals.
Small Business
Small businesses will benefit from a tax cut, with the rate lowered to 27.5%, starting this year. The threshold of eligibility for this cut will rise to an annual turnover of $10 million. This will affect 870,000 businesses and approximately 3.4 million employees. Small businesses will also get write-offs for $20,000 of equipment purchases. Over ten years, the corporate tax rate will be reduced to 25%, down from 30%.
See what Leigh O’Neill, NAB’s EGM for Small and Micro Business makes of #Budget2016. https://t.co/X4gzOlt2LGhttps://t.co/dfCIbDh9iG
— NAB (@NAB) May 3, 2016
Multinational corporations
The budget targets multinational companies such as Google and Apple that have previously avoided paying their fair share of tax. The government plans to tax multinational firms attempting to shift offshore at a higher rate of 40% profits. This will apply to companies with a turnover of $1 billion or higher and is expected to bring in $200 million in lost tax revenue.
Low income Earners
Scott Morrison announced a Low Income Superannuation Tax Offset, which allows employees with incomes up to $37,000 to claim a refund of up to $500 (in superannuation) of the amount of tax paid on their super contributions. This ensures that low income earners aren’t paying more in super tax than income tax.
Middle income Earners
The Treasurer has increased the limit of the upper-middle earnings bracket from $80,000 to $87,000, benefiting approximately 25% of working Australians.
“This is about providing room in our tax system for average full-time wage earners to earn more without being taxed more,” says Scott Morrison.
High income earners
High income earners will be detrimentally affected by the changes to superannuation, with a doubled tax rate of 30% on contributions of those earning more than $250,000 annually. This threshold is also $50,000 less than the current mark. The measures are expected to bring in $2.6 billion dollars from the top 4% of income earners.
University Students
University fees will rise dramatically with the partial deregulation, as Universities will be able to set their own fees for popular courses. This is predicted to earn the government $2 billion over five years in cuts. The government is also proposing a household means test for the HECS repayment threshold. Currently, graduates don’t repay their debt until they earn over $54,126, however this new scheme would mean that with whom students live determines how soon they would have to repay their debt.
Ugly: $6b cuts to unis, Medicare, welfare & pub sector but $12b in tax cuts & breaks to big biz & higher earners #Budget2016 #BetterBudget
— Adam Bandt (@AdamBandt) May 3, 2016
If you need to know more, the ABC has a good cheat sheet.
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