Minimal tax changes and a few tweaks to the tax system makes it a bit difficult to grade the 2021-22 Budget from a tax perspective.
With the emphasis on job creation, infrastructure spending, housing affordability and economic recovery, the Budget has not introduced any major changes to the tax system.
The Federal Budget grades are in:
A solid ‘B’, lacking in innovation or imagination
Director, Tax Services
FEDERAL BUDGET - 2021/22
FEDERAL BUDGET
- 2021/22
The Treasurer was quick to point out that Australia’s recovery from the pandemic and the 2020 economic crisis was on track and as a nation we fared better than most world economies.
The underlying cash balance is now expected to be a deficit of $161b in 2020-21, compared with a budgeted $213.7b. The unemployment rate is expected to fall below 5% by late 2022 and reach 4.75% by 2023. Having said that, the Government is still conscious of the impact of COVID-19 and is investing $1.9b on a vaccination strategy and $1.5b to extend the range of COVID-19 health responses.
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Superannuation
Some of the more interesting changes are in the superannuation area.
The Government proposes to remove the $450 per month threshold on making superannuation guarantee contributions. This will impact 300,000 low-income individuals (63% of which are women).
The 2021-22 Federal Budget saw an emphasis on job creation, infrastructure spending, housing affordability and economic recovery. To ensure continued economic growth, the Government seems to have adopted a solid 'B' approach to the Budget.
To ensure the continued economic growth and secure the recovery of the economy, the Government seems to have adopted a “steady as she goes” strategy including:
The extension of these tax concessions for another 12 months will be welcomed by individuals and businesses.
Some of the taxation tweaks include:
As the economy is heading in the right direction, it appears the Government is reluctant to introduce any significant changes to the tax system. The spend on infrastructure, health, education and training should ensure the Governments deficit and employment targets are met.
The tax initiatives will be welcomed by the business community, especially those who don’t like change. Will it lead us up the road to recovery, time will tell.
If I was going to grade the Federal Budget, it would be a solid ‘B’, but lacking in innovation or imagination.
Unfortunately, these measures are expected to apply from 1 July 2022.
The other changes include:
The idea of these superannuation measures is to encourage downsizers to sell and increase the supply of houses and at the same time allow first homeowners to enter the market.