Federal budget impact on everyday Australians
The key takeaway from this blog (5 min read)
Fast-tracked tax cuts and wage subsidies for younger workers underline the Federal Government’s budget.
Note: These changes are proposals only and may or may not be made law. Summary Personal tax cuts brought forward
- Immediate tax relief: ’Stage two’ personal income tax cuts will be brought forward two years, and backdated to 1 July 2020.
- Raised tax brackets: The upper threshold of the 19% tax bracket will rise from $37,000 to $45,000 and the upper threshold of the 32.5% tax bracket will rise from $90,000 to $120,000. This will be worth the equivalent of $41 a week to those earning between $50,000 and $90,000 a year, and about $49 a week to those earning more than $120,000 a year.
- Boost for workers on lower incomes: Workers on lower incomes will gain from an extension of the Low and Middle Income Tax Offset for a further 12 months until 30 June 2021, and increase in the Low Income Tax Offset. Support for pensioners, low income earners, welfare recipients and job-seekers
- Two cash payments: Aged pensioners, carers, disability support and concession cardholders will receive two $250 payments. The payments will be made progressively from 30 November 2020 and early 2021.
- Incentives for employers to hire: A JobMaker Hiring Credit will be paid for a year to businesses who hire an eligible unemployed worker aged 16 to 35. The rate will be $200 a week for people under 30 and $100 a week for people between 30 and 35, and they must work at least 20 hours a week. The JobMaker Hiring Credit is aimed at filling the gap when the JobKeeper scheme ends next March.
- Support to businesses employing apprentices and trainees: A wage subsidy will reimburse eligible businesses up to 50% of a new apprentice or trainee’s wages. Subsidies are capped at $7,000 per quarter, per eligible apprentice or trainee, capped at 100,000 places Your Future, Your Super package commencing 1 July 2021
- Making it easier to choose a super fund: Super fund members will have access to a new interactive online comparison tool, YourSuper, aimed to encourage funds to compete harder for members’ savings.
- Transparency around underperforming funds: To protect members from poor outcomes and encourage funds to lower costs, the Government will require superannuation products to meet an annual objective performance test. Those that fail will be required to inform members and refer members to the YourSuper comparison tool. Persistently underperforming products will be prevented from taking on new members.
- Additional trustee obligations: Super fund trustees need to ensure decisions are made in the best financial interest of members and provide better information on management and expenditure.
