With the Treasurer announcing the budget last week for 2018/19, we summarise the announcement:
The Treasury are predicting a budget deficit reducing from $18.24bn in 2017-18 to $14.5bn in 2018-19. The budget will then return to surplus in 2019-20.
Large Corporations and SMEs:
The $20,000 asset write-off scheme is extended for the coming financial year which encourages SME’s to invest in new equipment. The Government will be restricting multinational corporations on shifting profits to lower-taxing countries.
Personal Income Tax Cuts:
Australians earning up to $90,000 will get a tax cut of up to $530 per annum! This threshold will increase from $87,000 to $90,000 next year and then raised again to $120,000 in 2022-23. The 37 per cent tax rate threshold will be abolished in 2024-25 with all Australians paying 32.5 per cent to $200,000. Wages are expected to grow 2.25 per cent by the end of this financial year.
Although no new money, the Government are continuing with the already budgeted $75bn on infrastructure, improving roads, rail lines and bridges.
Funding for schools are to continue as per the last budget however a few tweaks have been made for a permanent fixture of the schools chaplaincy program and uni funding for some regional universities.
There will be extra funding for public hospitals and investment into new medicines. $1.6bn will go towards aged-care funding, helping more elderly Australians stay in their homes.
The ATO will be actively trying to consolidate dormant superannuation funds with active accounts along with banning funds automatically signing under 25’s to life insurance policies. From 2019 admin and investment fees will be banned on low balance accounts along with exit fee’s abolished on all accounts.
As a whole the budget has seemed to be received well – with a small tax relief for low to middle income households, backing small businesses, measures designed to improve the life of our ageing and continued improvement on our infrastructure.
In terms of interest rates, with low inflation and higher than target unemployment rates, we feel rates are to remain stagnant. Some of the measures above are to drive spending activity, however, with confidence levels still low, some homeowners may choose to pay down some debt levels first. Interest rates are still the lowest they have ever been