After an immensely challenging year for Australians, and financial turbulence across the globe, all eyes were on the Treasurer’s delayed 2020-2021 Federal Budget.
The message was clear: this Budget is designed around creating new jobs, stimulating the economy and helping businesses to find their feet in testing circumstances. The optimistic Budget intends to navigate the country through a crisis, but its measures will come at a cost, with Australia predicted to reach a net debt of $966.2bn by 2024.
It's one thing to study the big announcements, but what do they actually mean for Australian families? We took a look through the details to highlight how this could affect us day-to-day.
One of the biggest headlines from Mr. Frydenberg's announcement was $17.8 billion worth of income tax relief. This is set to benefit more than 11 million Australians over the short term, and will be backdated to July 2020. In reality, the amount of relief you'll receive in 2020-2021 will depend on your earnings, but many people are set to pocket a minimum of $1080. The good news is that your employer should be able to vary your tax rate through PAYG in a matter of weeks, so earners will feel the benefit of this scheme sooner rather than later.
Changes to your tax can signal a good time to review your finances and start setting goals. A financial adviser can help you plan for the future and help make recommendations on how to make the most of your income tax relief. Find out if financial advice is right for you.
Benefits for businesses
More good news if you're a business owner, as the Budget promised $31.6 billion in tax breaks for most organisations. Until the end of June 2022, businesses are now able to immediately tax deduct the entire value of eligible assets (this replaces the usual method of deducting a percentage in the first year and then accounting for depreciation). The government hopes that this benefit means businesses feel confident to upgrade, invest in their futures and create uplift for the Australian manufacturing sector. Examples of eligible assets include machinery, vehicles and business tools you might need, like a coffee machine or a label-maker.
Employment will be key to Australia’s recovery from the COVID-19 crisis. In the 2020-2021 Budget, there was particular emphasis placed on employing young people. The new ‘JobMaker’ hiring credit offers businesses financial incentives if they take on employees aged 16-35. This should help almost half a million young people get a leg up onto the employment ladder across a wide range of industries, although concerns have been raised about how this new incentive might leave older jobseekers out in the cold.
If you're thinking of learning a new skill or reaching the next level of knowledge in your current profession, you may be able to receive extra financial support. An apprenticeship subsidy worth $1.2 billion is predicted to create another 100,000 jobs, and funding was announced for an additional 30,000 places at university, as well as 50,000 short course places to help build skills in areas of national priority including STEM subjects.
Health and wellbeing
This year has been tougher than most, and the Budget delivers continued funding for mental health initiatives as well as other measures aimed at improving our health and wellbeing. These include making private health cover more affordable, and raising the age of private health insurance dependents. Aged care and disability facilities will also receive a boost to help keep our vulnerable population safe and well. The aged, and those on disability, carer or family welfare benefits can also expect a cash payment of $500, distributed in two installments – one in November and the other in March.
If the new Budget measures have left you reviewing your finances and in need of financial advice and recommendations, a financial adviser can help provide valuable advice on developing your wider goals and wealth plan.