4 Budget Insights To Make You Sound Smarter
If you, like so many others, just couldn’t get enthused or even adequately interested enough to take in the details of the federal budget, we thought we’d ask a friendly local tax advisor to give you small bites of useful Budget insights that might come in handy if the subject comes up in serious conversation. It might just save you having to run the loo or otherwise providing an excuse to duck away. And who says the media doesn’t care?
The Government has committed to spend more than $70 billion on transport infrastructure across Australia, part of which is $1 billion earmarked to fund priority regional and urban infrastructure in Victoria. Specifically, $500 million has been earmarked from 2017-18 to upgrade Victorian regional rail, including $100 million for the duplication of the Geelong Rail Line between Geelong and Waurn Ponds, which will have a significant impact on our region.
It’s likely that regional Victoria may also benefit from the announced $472 million Regional Growth Fund, with $272 million earmarked for grants of $10 million or more for major transformational projects that support long-term economic growth and create jobs in the region.
The National Disability Insurance Scheme (NDIS) started operating in the Barwon area of Victoria in 2013, with the national headquarters located in central Geelong. The government has announced its intention to increase the Medicare Levy by half a percent from 1 July 2019 to ensure the NDIS is fully funded and to guarantee Medicare. However, lower income earners will be offered some relief from the levy hike by way of an increase in the low-income payment thresholds.
The announcement to extend the current instant asset write-off by 12 months is significant to small businesses as a means of fueling investment in core revenue-producing assets. The possibility of further extension of the end date has also been mooted. Regardless, the program will remain with the entitlement reverting to $1,000 per asset from $20,000 currently.
The ‘10-year Enterprise Tax Plan’ that includes plans to lower the tax rate to 27.5% for companies with an aggregated turnover of less than $10 million from 2016-17, $25 million from 2017-18, and $50 million from 2018-19, with an eventual 25% tax rate for all companies in 10 years has been reaffirmed, which is great news for the competitiveness of our region’s local businesses.
Improving housing affordability is a key goal of the budget and a number of tax measures demonstrate that. Allowing first homebuyers to build a deposit in the superannuation system, pushing older Australians to downsize and keep proceeds for retirement, focusing investment in affordable developments and increasing costs for overseas buyers. This is expected to relieve some pressure in West Victoria’s housing market.
Another big winner from the budget could be the building and construction industry in regional Victoria, thanks to the likely increase in demand of new affordable housing.
Alex Duonis is a Tax Advisory Partner at Crowe Horwath, part of Findex