The Federal Budget just handed down (April 2019) by the Coalition Government had a mixed reception by media commentators.
So in reality, how has it affected us?
With the country now close to, if not in surplus, the economy appears to be getting stronger which is a wonderful sign. This is due to, among other factors, an increase in exports of minerals.
So who fared well in the budget?
🌿 Firstly taxpayers. The thresholds for each tax bracket have been lifted allowing you to be taxed at a lower rate than previously applied to your income.
🌿 Small to medium business. Higher instant write-off of capital assets which encourages small business to invest more in capital equipment which in turn, stimulates the manufacturing sector.
🌿 Regional infrastructure such as improved roads and rail throughout rural Australia. Assists in making our transport industry more viable and provides far greater capacity for the distribution of goods.
🌿 Increase in mental health facilities with a half a billion dollar injection.
🌿 New cancer treatment to be listed on the pharmaceutical benefits scheme for people suffering acute leukemia. Currently $120,000 per course down to top tier cost of about $40 per script.
🌿 Increase in the age of eligible taxpayers to contribute to superannuation. A big win for those who are still working and have low superannuation balances.
And those who have not fared so well...
🌿 Disappointingly, NDIS funding reduced by $1.6M due to lower than anticipated rollout.
🌿 Multinational companies who will be more closely scrutinised by ATO to recover unpaid taxes. I am sure most Australian's would be pleased with this initiative.
🌿 Employers who do not pay superannuation. Increased activity and prosecution. This allows employees to be better assisted with having the correct entitlements paid on their behalf.
No better or worse.
🌿 Farming, via lobbying by the National Farmers Federation, didn’t succeed in achieving what they have been advocating for, however, on the plus side, the Government has expanded the Farm Household Allowance payments as well as committing nearly $30M to expand access to international markets. So pretty much a neutral budget for farmers on this aspect.
Given it is an election year and judging by the polls, much of the budget will unlikely be passed by the election and the coalition will not be returned.
It is highly likely Labour will become the next ruling Government and, whilst they have a strong emphasis on schools, hospitals and services such as the NDIS, there are also some considerable negative aspects to their policies.
The removal of the capacity to claim back excess franking credits (bought in under Keating Government and widely hailed as progressive economics), the taxation of discretionary trusts at 30%, and anticipated changes to superannuation, the landscape may change considerably.
Whilst there are good and not so good policies on both sides, many of our clients use discretionary trusts for both asset protection and flexibility. They are small businesses, not the high end of town.
It is my personal view that the removal of excess franking credits for mum and dad investors, as well penalising small business for trying to protect their livelihood, are counterproductive and not in the best interests of the majority of our hardworking clients.
As always, we will watch this space with immense interest and educate you on the best ways of counteracting any negative impact, irrespective of whom forms Government.
NB: The views expressed here are solely those of the author and should not be interpreted to be those of associated parties such as professional groups, the dealer group, or any subsidiaries of these that the author is associated with or a member of.