This is a short summary of the Budget for the 2011-12 financial year. Despite the impact of natural disasters at home and abroad, Australia’s economic prospects remain strong. While these disasters impacted growth in 2010‑11, the economy is still expected to grow at above‑trend rates over the next two years, with the Federal Budget anticipated to return to surplus in 2012‑13. The recent Budget affects both individuals and business. Below we highlight some of the major changes and their potential impact on Australian tax payers, as outlined on the official Government Budget website.
In summary, this Budget responds to Australia’s workforce needs through better and more targeted skills and training and new measures to boost participation. The Budget also seeks to expand the Australian health care system, invest in infrastructure, make regional Australia a better place to live, and continue to assist families. The measures taken in the Budget aim to ensure that all Australians have access to the opportunities and prosperity from the mining boom.
Benefits to Individuals
Addressing emerging skills shortages is essential to maintain strong and sustainable economic growth. Through the Building Australia’s Future Workforce package, the Government is planning to make the investments necessary to ensure Australians have the skills they need to find jobs, and support growth, both now and into the future. The package also takes steps to encourage greater participation in the workforce, particularly from those most at risk of being left behind. The Budget is also aims to spread the benefits of a strong economy to all Australians, with a range of measures to provide further assistance to families and older Australians.
• The Government has promised to increase the annual rate of Family Tax Benefit (FTB) Part A for families with dependants aged 16 to 19 years who are enrolled in full time secondary school study by up to $4,208 to equal the rate for 13 to 15 year olds.
• From 1 July 2011, the Government will help families through more flexible access to their FTB Part A. Eligible families can request an advance on their annual entitlement to meet unexpected expenses, such as a repair bill.
• Families will be able to choose to have their Child Care Rebate paid at the time they incur their child care costs, usually fortnightly or weekly and will also have the option of having this payment made directly to their child care provider.
• The Education Tax Refund (ETR) is being extended to an estimated cost of $460 million over four years, to cover school uniforms, including optional uniforms and sports uniforms.
Hospitals and health care
• At least $16.4 billion in additional hospital growth funding guaranteed to the states from 2014‑15
• $2.2 billion over five years delivering on national mental health reform
• $717 million to expand access to diagnostic imaging services and make medicines more affordable
• $53 million to improve access to public dental services, particularly for people on low incomes
Schools and Education
• $425 million to reward top performing teachers
• $200 million to support school students with disability
• $222 million to extend the National School Chaplaincy program
Benefits to Businesses
The Budget also includes measures to reward small businesses that invest to grow, and to link Australian manufacturers to opportunities in the resources sector. Despite the current resources boom, the uneven nature of growth in our patchwork economy means that not all small businesses are prospering.
• First $5000 of the cost of a vehicle can now be immediately written-off by small business.
• Instant write off for all assets costing less than $5,000 from 2012‑13. Simpler depreciation methods will apply to long‑life assets as well.
• The Government will also reduce Pay As You Go instalments for 2011‑12 for the majority of small businesses providing a $700 million cash flow benefit.
• Small businesses to get a head start on the company tax cut to 29% that will be funded by the Minerals Resource Rent Tax.
• $34 million package to help Australian manufacturers better supply resource sector projects
Through the recently launched Adviser Finder tool, the Government is improving small business access to the $50 million a year Enterprise Connect Centres and the $42.5 million Business Enterprise Centres.
Savings in the Budget
The Government has identified $22 billion worth of savings, including:
• better targeting family payments ($2.0 billion);
• increasing the public sector efficiency dividend ($1.1 billion);
• reforming car fringe benefits ($954 million);
• phasing out the Dependent Spouse Tax Offset ($755 million); and
• removing access to the Low Income Tax Offset for unearned income of minors ($740 million).
Over the next few weeks we shall be providing more detail on many of the areas of change, especially those relating to businesses.
As a result of this Federal Budget, there are many changes that are set to take place over the next few financial years. For more information about how anything in the 2011 Budget may affect you or your business, or for any other tax or accounting related queries please contact the team of accountants and tax agents at The Quinn Group. Submit an online enquiry for more information, or call us on 1300 QUINNS (1300 784 667) or +61 2 9223 9166 to book an appointment.