Treasury’s update on the economic and fiscal outlook
Treasurer’s Economic Statement on 23 July 2020 has revealed a major deterioration in the budget position as a result of the COVID-19 support, with estimated deficits of $85.8 billion in 2019-20 and $184.5 billion in 2020-21.
The economic and fiscal outlook remains highly uncertain as a result of the second wave of COVID-19 being experienced in Australia. The Government will provide forecasts and projections over the forward estimates period and medium term in the 2020-21 Budget to be delivered on 6 October 2020.
Most of the tax and superannuation measures detailed in the Economic and Fiscal Update have been previously announced and many enacted. However, some changes to superannuation and tax measures have slipped in.
Second early release of super end date extended to 31 December
Treasurer’s Economic Statement has also revealed that Individuals will now have an additional 98 days in which to apply for the second round of early release of super because of the economic impacts of the coronavirus. The end date to apply will move to 31 December 2020 from 23 September.
The government did not announce any alteration to the rules on early access and the ATO online only application via MyGov process to apply.
All withdrawals made under this policy are tax-free and do not affect Centrelink, Veteran Affairs or JobKeeper payments. Initially Treasury said this measure would cost the government $1.15 billion over the forward estimates. It now estimates this will cost $2.22 billion over the same period.More than $28 billion has been released so far under the scheme. Treasury initially projected that this would total $30 billion, but clearly that estimate will be exceeded by a considerable margin, perhaps totalling as much as $60 billion.
Closure of eligible rollover funds (ERFs) deferred
The government says it will defer the start of the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020 by 12 months. This delay will mean that:
- super funds will have an additional 12 months in which to transfer new amounts to an ERF
- ERFS will have until 30 June 2021 to transfer accounts below $6000 to the ATO
- ERFs must transfer all remaining accounts to the ATO by 31 January 2022• super funds can transfer any account to the ATO if the trustees believe the transfer would be in the best interests of fund members.
Start date for Deductible gift recipient (DGR) reform revised
The Government has announced that it will revise the start date for the 2017-18 MYEFO measure Deductible gift recipient reform – strengthening governance and integrity and reducing complexity from 1 July 2020 to three months after the date of Royal Assent of the enabling legislation.
The measure proposes to reform:
- the requirement for non-government organisations with DGR status to register as a charity with the Australian Charities and Not-for-profits Commission (ACNC) from 1 July 2019
- transition arrangements to support existing organisations with DGR status to register as a charity with the ACNC
- the Commissioner of Taxation’s discretion to exempt organisations with DGR status from the requirement to register as a charity in limited circumstances
- the abolition of certain public fund requirements.
For more information on the media releases direct from the Treasury, visit, https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases, call our office on 07 5532 1733 or visit us at http://www.wilkes.com.au
*Article reference and commentary from Chartered Accountants Australia and New Zealand which provides an overview of the key indicators from the update.