Budget 2020 | A Road to Recovery?
The Morrison Government has delivered its much anticipated Federal Budget, a road to recovery that is paved with cash.
By comparison to many, Australia has managed the COVID-19 pandemic well, but good management isn't enough to protect us from the $213.7 billion deficit in 2020-21. The Government has taken to heart the old adage, "You have to spend money to make money" to trade our way out of a black hole.
As Australian Treasurer Josh Frydenberg delivered his first Budget, some of the measures are aimed at addressing the harsh lessons COVID-19 has taught us and seek to centralise production back in Australia to ensure our industries can be self-reliant.
What's in it for you?
The sheer number of initiatives are too comprehensive to include in this update, however key initiatives include:
- Immediate deductions for business investment in capital assets
- Changes to how companies can manage losses
- Access to generous tax concessions for a wider range of businesses
- $110 billion in infrastructure investment over 10 years
- Personal income tax cuts from 1 July 2020
- A $4 billion 'JobMaker' Hiring Credit to encourage businesses to take on additional employees aged 16 to 35 years old
- Two additional economic support payments to pensioners and other eligible recipients, targeted to drive money back into the economy.
Many of the bigger ticket initiatives aim to improve how Government interacts with the community and business in particular. This funding is focussed on streamlining interaction and compliance with Government requirements and investing in the IT infrastructure required to digitise the compliance process.
It's a cautionary tale
The final comments in the Treasurer's Budget speech paint a cautionary tale. The focus right now is on the path to growth and stabilising debt in an effort to boost consumer and business confidence. Leading commentators are calling it a 'sugar hit' budget without much meat or a budget geared toward the next election, rather than really digging Australia out from its first recession in 29 years.
However, once "recovery has taken hold and the unemployment rate is on a clear path back to pre-crisis levels" of below 6%, the second phase will kick in - the deliberate shift from providing temporary and targeted support to stabilising debt. Time will tell whether it has the ability to set the economy on a path toward sustainable recovery.
Speak to your accountant
Given the measures included in the Budget for individuals and business, we highly recommend speaking to your accountant to understand how these measures will impact you, your family, and your business.
Contact us on 02 9957 4033 for more information.
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Budget 2020 | Individuals
Budget 2020 | Your Superannuation
Budget 2020 | Infrastructure
Budget 2020 | Other Measures
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.