It’s Budget time – and once upon a time, we’d all be speculating about the price of beer or smokes.
Today, with an election looming, stand by for what The Daily Telegraph in Sydney called “rivers of gold”.
Next Tuesday, Treasurer Scott Morrison is expected to have money to spend and, with an election in the offing, he’ll be spending it.
He’s already abandoned proposals for an increase to the Medicare Levy to fund the National Disability Insurance Scheme. He claimed he simply didn’t need the money.
The annual cash deficit shrank by $15.4 billion. Profit taxes are generating two-thirds of the revenue revision — driven by China and higher commodity prices. Jobs are growing, meaning wages could soon rise.
Deloitte Access Economics forecasts overall revenues to grow by 9.8 per cent in 2017-18, the strongest increase seen since 2000-0.
So who are the winners and losers?
Young people saving for a deposit on their first home will be able to use their superannuation as a sort of supercharged savings account.
Savers will be able to salary sacrifice from their pre-tax income extra amounts over the compulsory superannuation contribution, up to a maximum of $30,000. They will be able to withdraw that cash, along with any earnings, from July 1, 2018. The deposit will attract the tax benefits of superannuation — contributions and earnings will be taxed at 15 per cent, and withdrawals will be taxed at 30 per cent below the marginal tax rate.
From July 1, 2018, people aged 65 or over will be able to make a non-concessional superannuation contribution of up to $300,000 from the proceeds of their primary residence, provided they have lived there for at least 10 years.
The “downsizer” contribution, which both members of a couple will be able to take advantage of, is in addition to the current contribution rules and caps, and will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions.
The Medicare rebate freeze is to be lifted, starting with incentivising doctors to bulk bill from July this year.
The pensioner concession card will be restored to those who lost it after the pension assets test change introduced earlier this year, so seniors will regain access to state and territory based concessions that were withdrawn after the change.
Up to 3.5 million people on the age and disability support pensions and parenting payment will also receive one-off cash payments to help cover their winter energy bills — $75 for singles and $125 for couples.
The Government will also provide $5.5 billion for home support services for the elderly as Australia’s population continues to age.
Students will face a 7.5 per cent tuition fee hike, phased in over four years starting in 2018.
You’ll also have to start repaying your tuition fee loans as soon as you reach an income of $42,000 instead of $51,957. High earners (over $119,882) will pay 10 per cent of their income instead of eight per cent.
What’s more, the repayments will be indexed to the consumer price index instead of the faster-rising average weekly wages, which will mean higher repayments over the longer term.
But the government is backing down on its promise and will not proceed with an increase of $20 a fortnight per child.
You do get $37.3 billion for child care over three years from July, to be allocated to about one million Australian families. A single, means-tested child care subsidy will replace previous child care benefits and rebates.
Families earning $185,710 or less and who need to use more child care will no longer face an annual cap. Those who earn more than $185,710 will have their child care rebates capped at $10,000.
Parents of pre-school-aged children will keep their guaranteed 15 hours a week of free access.
Funding will increase from $17.5 billion this year to $22.1 billion by 2021 and $30.6 billion by 2027.
For small business, the $20,000 instant asset tax write-off, introduced in last year’s budget, is being extended for another year to June 30, 2018, and will be open to businesses with an annual turnover of up to $10 million, up from $2 million. The Government has also promised payments of up to $300 million over two years to states and territory governments which cut down red tape for small business. It claims the red tape burden at the federal level has already been reduced by more than $5.8 billion.
Negative gearing rules for property investors are being tightened. You will no longer be able to claim tax deductions for travel expenses related to owning and renting an investment property, due to widespread rorting of the system with people claiming deductions for private travel.
And rules are also being tightened around depreciation deductions for plant and equipment items such as washing machines and ceiling fans. From budget night, you will only be able to claim the deductions if you actually purchased the item yourself. In the past, successive investors were able to claim depreciation on the same items, well in excess of their value.
The Australian Competition and Consumer Commission will get $7.9 million in 2017-18 to review retail electricity prices. It will produce a preliminary paper within six months and deliver a final report before June 30, 2018.