Treasurer Josh Frydenberg has handed down a budget he says is about keeping “the momentum going” in Australia’s economic recovery from COVID-19.
Here’s what’s in it for you.
As expected, the Morrison government has extended by a further 12 months the low-and-middle-income tax offset.
Treasurer Josh Frydenberg called it “a new and additional tax cut” in his budget speech, but what it actually means is taxpayers will avoid a scheduled tax hike, because we already had access to the offset this year.
- Taxpayers earning $37,000 or less will access an offset of up to $255
- Those earning between $37,000 and $48,000 will receive an extra 7.5 cents per dollar until they reach the maximum offset of $1080
- Taxpayers earning between $48,000 and $90,000 will receive the maximum offset of $1080
- Those earning between $90,000 and $126,000 will receive some benefit, too, with the size of the offset falling by 3 cents per extra dollar in income
- Taxpayers will receive the offset after they lodge their tax returns for the 2021-22 income year.
For home buyers
The government announced its big housing policies over the weekend so there were no surprises here.
- An additional 10,000 places have been added to the First Home Loan Deposit Scheme, where the government underwrites loans to first-home buyers so they can build a new home with a deposit as low as 5 per cent
- Another scheme, the Family Home Guarantee, will offer government loan guarantees to 10,000 single parents so they can buy a home with a 2 per cent deposit
- The government will also increase the amount of voluntary superannuation contributions members can release under the First Home Super Saver Scheme from $30,000 to $50,000
- And the deadline for work to be started under the HomeBuilder scheme has been extended by six months, meaning applicants now have 18 months from contract date to commence construction.
For retirees, superannuants and downsizers
The budget contained four key policies aimed at improving the superannuation system.
- As of July 1, 2022, employers will contribute to more workers’ superannuation accounts after the government scrapped the requirement for employees to earn at least $450 a month before they qualify for compulsory employer contributions
- The work test for voluntary non-concessional and salary-sacrificed superannuation contributions was also scrapped, making it easier for retirees to contribute more into their super
- The government’s own reverse mortgage product – the Pension Loans Scheme – was made more flexible. Participants will now be able to access up to 26 fortnights’ worth of top-up payments as a lump sum payment. And the government bolstered the scheme with a no negative equity guarantee so borrowers will not have to repay more than the market value of their property
- Finally, the government lowered the eligibility age for a scheme allowing downsizers to contribute a one-off sum of up to $300,000 into their super from 65 to 60. The change should come into effect on July 1, 2022.
For trainees, apprentices, and up-skillers
The JobMaker hiring credit has been quietly scrapped, but the budget contains plenty of spending on skills.
- A further 163,000 places will be made available on subsidised training courses – including 10,000 digital skills places and 33,800 courses for new aged-care workers – under an extension to the JobTrainer scheme
- The government will also spend an additional $2.7 billion on extending and expanding the ‘Boosting Apprenticeship Commencements’ wage subsidy, expected to help an extra 70,000 people access apprenticeships, on top of the 100,000 places promised in last year’s budget. Apprentices and trainees have until March 31, 2022 to sign up
- Money has also been set aside for 2700 places in Indigenous girls’ academies as well as 5000 gateway and in-training support services for women starting in non-traditional trades.
The budget confirmed the extra $1.7 billion in child care funding announced in recent weeks.
- For families with more than one child aged five and under in care, the Child Care Subsidy will be increased by 30 percentage points to a maximum of 95 per cent of costs for second and subsequent children
- And the government will scrap the $10,560 annual cap on the Child Care Subsidy for high-income households.
For business owners
- The budget includes a year-long extension to the temporary full expensing measure, formerly known as the instant asset write-off
- The measure, for which 99 per cent of businesses are eligible, allows businesses with annual turnover of less than $5 billion to immediately deduct from their tax bill the full cost of eligible depreciable assets up to any value. It is aimed at boosting investment and will apply to assets purchased after 7.30pm on October 6, 2020 and first used or installed ready for use by June 30, 2023
- Elsewhere, the government also extended for a further 12 months the temporary loss carry-back measure. This allows businesses – when they lodge their 2022-23 tax return – to carry back tax losses from the 2022-23 income year to offset previously taxed profits as far back as 2018-19.
For mental health
In his speech, the Treasurer shone a spotlight on the more than 65,000 Australians who attempt to take their own lives each year.
Suicide is the leading cause of death among those aged 18 to 44, and so the government has committed $2.3 billion to mental health care and suicide prevention.
The money will be spent on:
- More Headspace centres to support more young Australians
- Expanding the model to those aged over 25, with a new Head to Health national network of 40 centres
- Extra funding for treatment of eating disorders
- Greater access to psychiatrists, psychologists and GPs through Medicare
- Universal access to care for people discharged from hospital after attempting to take their own life
- Establishing a new National Suicide Prevention Office
- Setting up a Royal Commission into Defence and Veterans Suicide.