The 2020-21 Federal Budget is a road to recovery paved with cash.
Key initiatives include:
The Budget also contains two additional Economic Support payments to pensioners and other eligible recipients to drive money back into the
economy.
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.
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.
Outside of the big ticket tax measures, what is striking about this Budget is the sheer volume of initiatives it funds - too many to itemise
in this update. Many of the 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.
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. 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.
Falling behind on your BAS lodgements looks like an administrative problem. Left long enough, it becomes an expensive one, because the GST you collected stays payable indefinitely while the GST credits you are owed disappear after four years. Here is what that looks like in dollars.
With negative gearing now quarantined for established dwellings, new house and land has become the sensible play for investors — but there is a trap in the first eighteen months. Interest on the land is denied, while interest on the construction is not. If the bank has written one loan, someone has to do the sums. Here is why it pays to split the loan before you sign.
When the draft legislation for the trust minimum tax was released, it came with a reassurance: if you do not want to restructure, you can simply make an election instead — no restructure, and no state stamp duty. That is accurate, but it is also a very small part of the decision. Here is why you should choose your structure for the eventual sale of your business, not for the announcement.
