The federal budget is in and the headline numbers much improved as expected.
The budget deficit for 2020-21 landed at a forecast $161bn, fall lower than the $197.7bn forecast by the government in December. However, the deficits for the following years, on average, came in higher than forecast.
“A key surprise in the May 2021 budget is that the spending package is larger than widely anticipated and that the budget improvement, beyond 2020/21, is smaller than expected,” Westpac economists said in their analysis.
The spending and initiatives fall under four key themes: protect Australia from Covid, create more jobs, guarantee essential services, and build a more resilient and secure Australia.
In terms of how tax measures will help deliver these, the government is extending temporary full expensing for businesses for an additional year until June30 2023 at a cost of $17.9bn over four years), and also extending the temporary loss carry back at a cost of $2.8bn. For consumers, the low and middle income tax offset is also being retained for 2021-22, delivering lump sum rebates of $1080 for people on incomes of $48,000-$90,000 and costing $7.8bn over four years.
There’s also a fresh COVID response package, spending on skills and training, an additional $7.2bn for infrastructure over four years, tweaks to superannuation, greater funding for aged care and childcare, and new measures to support women.
The information in this article is general information only, it does not constitute any recommendation or advice; it has been prepared without taking into account your personal objectives, financial situation or needs and you should consider its appropriateness with regard to these factors before acting on it. Any taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. You should also consider obtaining personalised advice from a professional financial adviser before making any financial decisions in relation to the matters discussed.
Josh Wall is the Head of Video at Westpac Wire. Prior to joining the team, he spent 10 years as a video journalist and documentary filmmaker, most recently as Head of Video for the Guardian Australia. He also worked across numerous News Corp mastheads in Sydney as a presenter, producer, writer and video journalist. Josh is originally from Perth, Western Australia where he began his career by co-creating a video magazine that focused on music and the arts.
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