The 2020-21 Federal Budget has been positioned as a road to recovery paved with cash, and for the Morrison Government it is one they are hoping goes to plan.
As has already been suggested by the Government, this budget was going to be like no other, when it comes to the size of the deficit and how borrowed money has been allocated.
The key initiatives outlined in this year’s budget include:
- 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.
- A 50% wage subsidy for up to 100,000 new apprentices or trainees.
- $110 billion in infrastructure investment over 10 years.
- 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 business.
Whether you’re a business owner or an interested individual, this budget has been prepared with the hopes that tax cuts and cash will encourage spending and a kick-start for our economy. However, Australia’s strict management of the COVID-19 pandemic has come at a huge economic cost with a $213.7 billion deficit in 2020-21 and substantial deficits to follow for the next few years. 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.
With ongoing job uncertainty and low-business confidence, we expect people will be cautious as to how they choose to spend their tax cuts and incentives. Until there is a wide level of confidence nationally we believe spending will remain low and saving will be a priority.
What we can be sure of however is that we have interesting times ahead.
Some greater detail around particular aspects of this year’s budget can be read here in the Budget 2020-21 q4financial Report, and as always if you’ve any specific questions feel free to reach out to our team.
Grant and Kelly
A CPA and Director of q4 financial, Grant Titman brings leadership and the disciplined energy of an endurance runner to deliver ‘big picture’ outcomes for his firm and his clients.
Grant’s expertise includes and extends well beyond achieving profitability and growth for his clients’ businesses. His focus is squarely on helping his clients to achieve three key goals: extract wealth from their business; set and achieve long-term wealth objectives; and ultimately, enjoy financial freedom.