STOP PRESS! Treasurer hands down Budget for 20/21 year
Image: Charles Blackman, 'Goodbye Feet', 1956 (with permission Estate of Charles Blackman)
STOP PRESS! Treasurer hands down Budget for 20/21 year
On Tuesday 6 October 2020 Treasurer, Josh Frydenberg , handed down the first Covid-19 budget Federal Budget, his second budget.
It was to be a budget that showed no restraint on expenditure due to the need for exceptional spending brought about as a result of the once in a hundred year event of Covid-19.
The Government is hoping that massive spending of around $ 670 billion, with an historically high deficit of around $215 billion will be enough to stimulate growth in the economy and to spur on employment and productivity.
The spending is so high and revenue so low that the expected deficit is expected to reach 1.2 trillion dollars by 2030.
Amongst the highlights of this year’s Budget are:
- Bringing forward of the second stage of the personal tax cuts by 2 years to 1 July 2020, lifting the 19% threshold from $37,000 to $45,000, and lifting the 32.5% threshold from $90,000 to $120,000. At the same time, the low and middle income tax offset (LMITO) will be retained for 2020-21.
- Loss carry-back: The Government will allow eligible companies to carry back tax losses from the 2019-20, 2020-21 or 2021-22 income years to offset previously taxed profits in 2018-19 or later income years.
- Asset write-off: For eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 and first used or installed by 30 June 2022, over 99% of businesses will be able to write off the full value of any eligible asset they purchase for their business. This will be available for small, medium and larger businesses with a turnover of up to $5 billion until June 2022. Previously this has been limited to a write off of $150,000.
- Superannuation: Several measures were announced. Commencing on 1 July 2021, there are a few changes including:
- YourSuper portal - the ATO will develop systems so that new employees will be able to select a super product from a table of MySuper products through the YourSuper portal;
- stapled accounts - an existing super account will be "stapled" to a member to avoid the creation of a new account when that person changes their employment;
- MySuper benchmarking - from July 2021, APRA will conduct benchmarking tests on the net investment performance of MySuper products, with products that have underperformed over two consecutive annual tests prohibited from receiving new members until a further annual test that shows they are no longer underperforming;
- super trustees - best financial interests duty - the Government will legislate to compel super trustees to also act in the best "financial" interests of their members. The Government will also require super funds to provide better information regarding how they manage and spend members' money in advance of Annual Members' Meetings.
- R&D: For small companies, those with aggregated annual turnover of less than $20 million, the refundable R&D tax offset will be set at 18.5 percentage points above the claimant's company tax rate, and the $4 million cap on annual cash refunds will not proceed. For larger companies, those with aggregated annual turnover of $20 million or more, the Government will reduce the number of intensity tiers from 3 to 2.
- ATO funding: The Government will provide $15.1 million to the ATO to target serious and organised crime in the tax and super systems.
- JobMaker hiring credit: The Government announced a new JobMaker hiring credit to encourage businesses to hire younger Australians. The JobMaker hiring credit will be payable for up to 12 months and immediately available to employers who hire those on JobSeeker aged 16-35. It will be paid at the rate of $200 per week for those aged under 30, and $100 per week for those aged between 30-35. New hires must work for at least 20 hours a week. All businesses, other than the major banks, will be eligible.
- The Government has committed to creating 100,000 new apprenticeships.
- Age Pensioners will receive an additional $250 payment from November 2020 and a further $250 payment from early 2021.
There have also been measures designed to strengthen the tax treatment for businesses giving these entities the ability to access 10 small business concessions, some of which include the following:
- Some changes to FBT for car parking , retraining and electronic devices
- Easier ability to access the deductibility of start-up costs and prepaid expenditure
- There will be access to simplified trading stock rules
- Simplification of some tax collection methods.
Budget and the arts
It is predictable that the Government has not changed its tune and has remained true to form in not offering up any specific pro-arts measures in the Budget.
Clearly, there are little or no direct measures to ease the financial burdens of the artists in society over the pandemic.
With the exceptions of the Australia Council, Australian Film, Television and Radio School, Bundanon Trust, National Film and Sound Archive of Australia, National Library of Australia, National Portrait Gallery of Australia and Screen Australia that saw an increase in funds (generally less than an inflation index), 7 of the 13 arts agencies were delivered cuts in Budget 2020-21.
I guess one should be a bit more charitable because this government did launch much in the way of assistance packages through the Australia Council and the so-called $250m rescue package announced earlier this year – most of which was in the form of loans or insurance assistance – however, even this support will do little to address the sector’s structural challenges.