The 2016 Federal Budget was handed down by Treasurer Scott Morrison last night at 7:30pm AEST.
In the lead up to budget night, a number of issues concerning both property investors and Australian’s alike have been debated by the major parties, particularly as the country heads towards an election.
As expected from previous announcements made by the Coalition, there were no changes to negative gearing or Capital Gains Tax allowances available for property investors outlined within the budget.
There was positive news for small and medium enterprises, as Morrison claimed these were the main driver for economic growth and jobs, resulting in approximately $5.3 billion in tax cuts.
Commercial property owners and tenants will be happy with the news of a company tax cut to 27.5 per cent for 870,000 businesses with a threshold of up to $10 million in turnover from the 1st of July 2016.
This built on announcements made by the Government during the May 2015 budget, which allowed small business owners to claim an instant asset write-off for plant and equipment items valued less than $20,000.
This means enterprises with an aggregated turnover of less than $10 million, instead of $2 million as previously, will now be entitled to claim a range of incentives and concessions such as instant asset write-offs, depreciation pooling provisions and Pay As You Go installment payments from the 1st of July 2016.
Another area of the budget business owners can appreciate is the introduction of an internship programme outlined as stage two of a new intensive pre-employment skills training programme called Youth Jobs PaTH (Prepare-Trial-Hire). The programme will introduce 120,000 internship placements over four years, seeing Job Seekers benefit from an additional $200 per fortnight on top of their regular income support payments and businesses receiving an upfront payment of $1,000. Employers will also be eligible in stage three for a ‘Youth Bonus Wage Subsidy’ between $6,500 and $10,000, depending on the young person’s job readiness.
The Treasurer also introduced a range of superannuation budget measures, of which women and low income earners who earn less than $37,000 a year were the core beneficiaries.
From the 1st of July 2017 the Government will reduce access to generous superannuation tax concessions for the most wealthy by introducing a transfer balance cap of $1.6 million on amounts moving into the tax-free retirement phase, with balances able to increase above this cap, on account of tax free earnings, once transferred, extending the 30 per cent tax on concessional contributions to those earning over $250,000, reducing the annual cap on concessional superannuation contributions to $25,000, and establishing a lifetime non-concessional contributions cap of $500,000 as of 7.30pm the 3rd of May 2016.
The Government will also be introducing a low-income Superannuation Tax Offset from the 1st of July 2017 for those earning less than $37,000. This is to allow individuals with an adjusted taxable income of up to $37,000 to receive a refund into their superannuation account of the tax paid on their concessional contributions, up to a cap of $500.
The low-income Superannuation Tax Offset is aimed to assist around 2 million low income women to build their superannuation savings.
A $50 billion national infrastructure plan was also featured in the budget to help support economic growth. Equity for the Australian Rail Track Corporation; a Water Infrastructure Loan Facility; construction of the Midland, Brue and Pacific Highways as well as the Murray Basin Freight Rail and the Perth Freight link were just some of the projects the Government specified where these funds will be spent. The completion of many of these projects will also see investors benefit from improved property values and rental yields in the areas that surround major work completed.
Over the coming days, the Labor party will review the Coalition’s budget and provide their budget reply.
For a copy of Scott Morrison’s full budget speech, click here.