What’s in the 2020 Federal Budget for you?
The 2020 federal budget was delivered on Tuesday 6th October. There were no major impacts identified to
members financial strategies other than anticipated tax cuts and other stimulus measures.
As the table shows the 32.5% marginal tax rate will be lifted from $37,000 to $45,000 and the 37% marginal tax rate from $90,000 to $120,000. This is expected to save the average person earning $80,000, $1,080 in tax each year.
For those members who run a business with a turnover of less than $5 billion, there is an instant tax write off for the full value of any asset they purchase. This alleviates the need to depreciate assets over time and brings forward future tax deductions.
Also, for business owners the government introduced the JobMaker Hiring Credit which will give $200 a week to employers who hire anyone aged 16-30, and $100 a week for any worker aged 30-35. New employees must have been on JobSeeker, be given at least 20 hours of work a week and all businesses except for the major banks will be eligible.
For welfare recipients, including pensioners and disability carers, they will receive two cash payments of $250 — the first from December and the second from March. Other than this there were no changes to social security rules.
From an economic perspective, Australian net public debt is expected to increase from approximately 30% of GDP to almost 44% of GDP.
The amount of debt that the government is using is both necessary and will help stimulate companies earnings.
The debt pile is not an immediate issue, as with low interest rates, the loan interest payments remain far lower than previous decades. In fact loan repayments will be about one third of what they were during their peaks in the mid 80’s and
In summary, the budget will help stimulate share prices over the next 5 years and keep interest rates low.
I hope you are well and please let me know if you wish to discuss the Federal Budget further.