On 11th of May 2021 the Australian Government released the Federal Budget 2021-22, forecasting net debt to grow to $980.6 billion by 2024–25 which is modest when compared to the announcements made 12 months ago. A significant component of new spending is transport and other physical infrastructure, more than $15 billion over 10 years, distributed across all states and territories.
The Australian economy has exited from the COVID-19 induced economic downturn faster and stronger than all expected. Whilst reducing Commonwealth Government deficit forecasts for FY2020–21, the next three financial years are higher compared to last year’s budget and Mid-Year Economic Overview.
Removal of Emergency Packages
With the economy having outperformed all other major advanced economies in 2020, surpassing expectations growing at the fastest rate on record. The removal of supporting Jobkeeper payments at $89 billion, is the largest economic support program in Australia’s history, supporting over 3.8 million individuals.
Economic Commentary: (GDP, Unemployment and Budget Deficit) Australia’s recovery appears to be well placed with more people in work than ever before and unemployment on course to settle below 5% for just the second time in almost 50 years. GDP growth is forecasted at 4.25% in 2021–22, above the previous four years annual growth rate of 2.5%. Unemployment is expected to fall to 4.75% in mid-2023 below the long-term average of 6.83%.
Australia’s economic recovery is aided by support of $1.2 billion for the aviation and tourism sector. With $198.2 million for enhancing trade and strategic capability enabling support and trade diversification.
The Government has not announced any measures in relation to the Superannuation Guarantee (SG) rate. This means that, subject to any subsequent change of heart from the Government, the minimum SG rate will increase from 9.5% to 12% over the next five years. From 1 July 2021, the minimum SG rate will increase to 10%.
Individual tax residency rules will be modernized, whereby primary tests deem Australian tax residents if they are physically present in Australia for at least 183 days during the tax year. Where the primary test is not met, secondary tests will apply based on a combination of physical presence and measurable, objective criteria.
The Low - and Middle-Income Tax Offset of up to $1,080, originally scheduled to cease in 2020-21, will be retained for the 2021-2022 income year. The commencement date for the 'Stage Three' personal income tax cuts (which predominantly impacts middle-to-high income earners) has not been changed in this Budget and remains as 1 July 2024.
Base rate entity company tax rate: From the 2017–18 to 2019–20 income years, companies that are base rate entities must apply the lower 27.5% company tax rate. The rate reduced to 26% in the 2020–21 income year and then 25% in the 2021–22 income year and future years. The Government has extended the ability for eligible companies to carry back tax losses and benefit from full expensing of eligible asset purchases by 12 months following on from the announcements in the 2020-21 Budget. The company loss carry-back measures will be extended to 30 June 2023 and will enable corporate tax entities with an aggregated turnover of less than $5 billion to deduct the full cost of eligible depreciating assets of any value acquired from on 6 October 2020 provided the assets are first used or installed ready for use by 30 June 2023.
The Budget further announced that program numbers for the 2021-22 Migration Program planning levels will be maintained at the current level of 160,000. Family and skilled stream places will be maintained with a continued focus on onshore visa applications. With respect to skilled visas, priority will be given to highly skilled migrants in the employer sponsored, business innovation and investor program and global talent program.
Fidinam Australasia Real Estate
stay always up to date with relevant new from our experts from Fidinam Australasia Real Estate by filling the form below, or learn more about How To Invest in Australia in our dedicated page!