The Federal Treasurer, the Hon. Josh Frydenberg MP, delivered the 2020 Federal Budget on 6 October 2020. The budget is firmly focused on supporting Australia’s recovery from the first recession since 1991 and worst economic performance since 1959.
The budget revealed that real GDP is projected to shrink by 1.5 percent in 2020-21, before rebounding in the following years. Similarly, the unemployment rate is set to peak this year at 7.25 percent and will take at least two years to fall below 6 percent.
Given the fall in tax revenue and increase in spending, the 2020-21 Budget is projected to be in deficit by $213.7 billion, with the deficit falling to $66.9 billion by 2023-24. Net debt will increase to $703 billion this year and peak at $966 billion or 44 percent of GDP in 2024.
Central to the Government’s plans for economic recovery is the JobMaker package, which includes significant tax relief measures for households and businesses, a boost to infrastructure investment and a hiring credit for new employees.
Key proposals include:
- Extension of COVID-19 related support measures including a new JobMaker tax credit to support businesses hiring new staff
- Bringing forward, by two years, stage two of the Personal Income Tax Plan to 1 July 2020
- Tax relief for businesses; including instant asset write-offs, Fringe Benefit Tax concessions and carry back losses to offset previous years’ profits.
- Reforms to superannuation to reduce duplicate accounts and improve transparency and performance
- Significant spending measures to support and improve the aged care sector.
- Additional payments (comprising two amounts of $250) for eligible income support recipients and concession card holders.
- A capital gains tax exemption for granny flat rights supported by a formal written agreement.
These changes are proposals only and may or may not be made law.
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Once these proposals become legislated, we can help you make adjustments to your plan and place you in the best position for the future.
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