2020-2021 Budget showing that Australians have experienced a year like no other.
The COVID-19 pandemic has had a profound impact on Australia’s health system, community and economy, as it has all around the world.
The Government has acted quickly and decisively to address the consequences of COVID-19. As a result, Australia has achieved some of the best health and economic outcomes in the world. However, the impacts of COVID-19 will continue to be felt in the Australian economy for years to come. The Australian community also continues to feel the effects of COVID-19, through disruption to their lives, education and health. The global economic outlook remains highly uncertain, with many countries experiencing their worst downturns since the Great Depression.
This is a once-in-a-century shock that requires an unprecedented level of support across the economy. The Government’s initial response to the COVID-19 pandemic provided $299 billion in overall support.
The Government’s economic response is designed to support Australian households and businesses through an exceptionally difficult period. It has helped keep businesses in business and Australians in jobs through the JobKeeper Payment and Boosting Cash Flow for Employers, and supported Australians in need with the Coronavirus Supplement and $750 payments to those on certain income support.
The Government’s response is now transitioning to ensure the Australian economy recovers strongly by targeting additional temporary support measures to boost household incomes, bring forward business and infrastructure investment activity, and drive the unemployment rate back down.
The Government is continuing to support those sectors, regions and communities that face significant challenges.
The Government’s response to the 2019-20 bushfire season is also supporting families, farmers, business owners and communities to recover.
2020-2021 Budget has been announced and at a glance will be including the following:
Lower taxes for hard-working Australians
In this Budget, the Government is delivering an additional $17.8 billion in personal income tax relief to support the economic recovery, including an additional $12.5 billion over the next 12 months. It builds on the $8.1 billion in tax relief that will be delivered for the 2020‑21 income year under the already legislated Personal Income Tax Plan.
Under the Government’s changes, individuals will benefit from bringing forward the tax cuts in Stage 2 of its Plan, as well as a one-off additional benefit from the low- and middle-income tax offset in 2020-21.
Supporting housing construction
As part of our economic recovery plan to create jobs, rebuild our economy and secure Australia’s future, an additional 10,000 first home buyers will be able to purchase a new home sooner under the extension to the First Home Loan Deposit Scheme.
The additional 10,000 places will be provided in 2020-21 to support the purchase of a new home or a newly built home. This will allow first home buyers to secure a loan to build a new home or purchase a newly built dwelling with a deposit of as little as 5 per cent, with the Government guaranteeing up to 15 per cent of a loan.
Since the start of the COVID-19 pandemic the Government has committed to invest an additional $14 billion in new and accelerated infrastructure projects over the next four years. These projects will support a further 40,000 jobs during their construction.
This investment is part of the Government’s record 10-year transport infrastructure investment pipeline, which has been expanded to $110 billion and is already supporting 100,000 jobs on worksites across the country.
Supporting business and investment
To support new investment and increase business cash flow, the Government is providing a temporary tax incentive, which will be available to around 3.5 million businesses (over 99 per cent of businesses) that employ around 11.5 million workers. The incentive will apply to around $200 billion worth of investment, including 80 per cent of investment in depreciable assets by non-mining businesses. From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.
The Government will also allow companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid, to generate a refund. Loss carry-back will be available to around 1 million companies that employ up to 8.8 million workers. Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns.
A digital Australia
The COVID-19 pandemic has accelerated the adoption of digital technologies by Australian businesses and consumers which has enabled many to transform their operations and continue to trade through the crisis.
The Government’s Digital Business Plan will build on this momentum to support an even greater adoption of new technologies across the economy – by both businesses and consumers.
An additional $4.5 billion investment in NBN Co will bring ultra-fast broadband to millions of families and businesses. Funding of $29.2 million will also accelerate the rollout of the 5G network.
Improving the ease of doing business
Cutting red tape is a key element of the Government’s Economic Recovery Plan for Australia. That is why the Government is making it easier for businesses to invest, create jobs, respond quickly to challenges and seize opportunities.
In this Budget, the Government will:
- Streamline and digitise a wide range of regulatory processes
- Reduce regulation that imposes unnecessary costs and hinders business activity
- Support small business through the recovery
JobMaker Hiring Credit
The Government’s new JobMaker Hiring Credit will help to accelerate growth in employment during the recovery by giving businesses incentives to take on additional employees that are young job seekers aged 16 to 35 years old. The JobMaker Hiring Credit is a key part of the Government’s JobMaker Plan to boost Australia’s economic recovery.
The JobMaker Hiring Credit is estimated to support around 450,000 positions for young people and cost $4 billion from 2020-21 to 2022‑23.
Investing in education, skills and apprenticeships
The Government is making skills development a high priority as part of its JobMaker Plan. The Government’s commitment will support getting people into jobs and ensures that Australians have the right skills for the jobs of the future.
- JobTrainer – growing Australia’s workforce
- New apprenticeships to help the recovery
- Support for job seekers
- More job-ready graduates
- Short courses to reskill and upskill Australians
Delivering economic security for women
The Government is delivering the 2020 Women’s Economic Security Statement to increase women’s workforce participation, improve earning potential and enhance economic independence. The $240.4 million package will deliver employment opportunities, support to parents and support for women in the workplace.
This includes employment programs to support women’s leadership and development, and increase opportunities for women in science, technology, engineering and mathematics (STEM), business and male-dominated industries.
Supporting manufacturing and research and development
The COVID-19 pandemic has shone a light on the critical importance of supply chains and having a flexible, adaptable and innovative manufacturing capability.
The Government’s $1.5 billion Modern Manufacturing Strategy is a long-term plan to support Australia’s economic recovery.
The Government is investing an additional $2 billion through the Research and Development Tax Incentive.
Energy security and market reforms
Nationally, household electricity prices have fallen by 4.7 per cent since December 2018, with wholesale electricity prices decreasing over the past 12 months. To maintain lower prices, the Government will work with private providers to increase dispatchable generation capacity and the National Cabinet to ensure an efficient and integrated system.
The Government is securing Australia’s electricity, fuel and gas supplies to keep prices low, create new jobs and support local industries.
Supporting resilient regions
The Government continues to stand with regional Australia who has withstood flood, fire, drought and now, COVID-19. Through a regional package of more than $550 million the Government will support our regions to recover from the impacts of COVID-19. This builds on support provided through the $1 billion COVID-19 Relief and Recovery Fund.
A more secure and resilient Australia
The Government is building water infrastructure for the 21st Century helping to increase our water security, build regional resilience, deliver jobs and grow our critical agriculture sector. An investment of $2 billion for new projects under the National Water Infrastructure Development Fund will support the next generation of water infrastructure through the Grid.
The Government is also investing $270 million in the Murray-Darling Communities Investment Package which will improve the health of the Basin while supporting regional development.
To ensure that Northern Australia can continue to benefit from infrastructure to support essential services, the Government has extended the Northern Australia Infrastructure Facility (NAIF) for an additional five years, to June 2026, and expanded its lending criteria.
Protecting our environment
The Government is investing $47.4 million to protect our oceans and restore their health and is committing $29.1 million to reduce the risk of chemical contamination on Commonwealth land.
The Government will invest $249.6 million over four years to modernise recycling infrastructure, reduce waste and recycle more within Australia.
Preventing, detecting and treating COVID-19
In this Budget, the Government is investing $4.9 billion for a range of health measures ensuring Australians continue to receive the medical care and support they need throughout the pandemic. The flexible and scalable response enables the health system to respond, protecting all Australians.
Supporting Australians through the pandemic
The Government is providing unprecedented financial assistance to Australians to support them through the COVID‑19 pandemic, including:
- The JobKeeper Payment
- Additional income for individuals
- Two additional Economic Support Payments for pensioners and other eligible recipients
- Temporary access to superannuation
Your Future, Your Super
The Government is committed to making Australians’ super work harder for them to boost their retirement savings.
The Government’s Your Future, Your Super reforms are the next phase of the Government’s reform agenda and will see Australians save $17.9 billion over the next decade.
Keeping Australians safe
Australia’s cyber security capabilities are strong, but the threats we face online are increasing. COVID-19 has highlighted how much we live and work online. The Government will provide an additional $201.5 million to deliver the 2020 Cyber Security Strategy.
The Government is supporting those who keep us safe by committing $300.2 million to the AFP to strengthen their capacity to keep Australians safe in an increasingly complex threat environment.
Supporting our region
Australia has a deep and abiding interest in the stability, prosperity and resilience of the Pacific and Southeast Asia, reflected in the Pacific Step‑Up and other initiatives. The Government is ensuring recovery in our region:
- Investing in the COVID-19 Vaccine Access and Health Security Program in Pacific and Southeast Asian countries.
- The Australian Infrastructure Financing Facility for the Pacific
- COVID-19 Recovery – Support to the Pacific and Timor‑Leste
- Delivering security infrastructure projects in the Southwest Pacific
For further information please visit https://budget.gov.au/. The following fact sheets may also be of interest:
Our team at Gerard Wilkes & Associates are here to help. If you have any questions regarding 2020 – 2021 Budget, or would like to discuss your taxation matters further, please contact us at https://www.wilkes.com.au/contact-us/ or call our office 07 5532 1733.