A pre-election budget is always widely anticipated, with it being one of the rare opportunities for the Government to bribe us with our own money. And this year was no different as the money came out yet again in another attempt by Turnbull to win us over before the next election.
Having said that, it was so forgettable that with only a few days and a few drinks even we nearly forgot what was in it. So, for those who (almost) missed the whole thing or had much more pressing matters to attend to (like getting your already-a-day-late assignment in before copping a 20% reduction in marks), here are the key things relevant to you that you should take away from the pre-election budget.
Personal Income Tax Plan aka you get more $$$
Featuring the much talked about milkshake and sandwich tax cut, the budget’s seven-year personal income tax plan lets you keep more of your own money in just three simple steps.
- Providing “immediate” tax relief, the increase in the low income tax offset from $445 to $645 will amount to a tax cut of approximately $10 a week for low and middle income earners, with individuals and working couples set to be $530 and $1,060 better off a year respectively. This means that money otherwise lost to the Government can now be spent on some extra food, help pay for your car registration or pay for parking.
- Hoping to solve the problem of bracket creep, the Government has decided to raise the income tax thresholds, with the top threshold of the 32.5% tax bracket to be increased from $87,000 to $90,000 from July this year and increased again to $120,000 in 2022-23. The other threshold of the 19% tax bracket will be increased from $37,000 to $41,000 from 2022-23. This basically means as wages rise with inflation, taxpayers are less likely to pay excessive income tax.
- Promising to simplify the taxation system, the Government plans to abolish the 37% tax bracket in 2024. This will reduce the number of tax brackets from five to four, meaning that 94% of taxpayers will now face a marginal tax rate of 32.5% or less in 2024-25. If the tax system were to be left unchanged, only 63% of taxpayers would benefit.
In short, when you graduate, or if you have already graduated, you get to keep more of your money YAY. Thanks Malcom, guess the next round is on us.
Jobs and growth jobs and growth jobs and growth
Continuing their much-repeated theme of jobs and growth, the Government has a plan to back businesses and create more jobs for workers by cutting corporate tax to 27.5% for companies with an annual turnover of less than $50 million. They also plan to increase the tax discount rate for small unincorporated businesses from 5% 8%, then 16% by 2026. The hope being that, as businesses retain a greater share of their profits and subsequently have more financial space, they will be able to compete internationally, invest more, and be more enterprising.
Well, if all goes according to plan, this will make businesses more competitive, invest more, and create more jobs, thus keeping your grad job dreams alive. If all goes according to plan.
Now whilst some of us are still trying to figure out what’s happening tomorrow, let alone over the next fifty years, it’s nice to know that someone is thinking ahead with the Government implementing some important changes to our superannuation system.
Some of these changes include giving the Taxation Office the power to actively reunite Australians with their lost and inactive funds worth less than $6000, which, in conjunction with a cap on certain fees at 3%, and the banning of account exit fees, will mean that casual and low-income and workers with multiple accounts will not have their savings eroded by fees.
However, these Superannuation changes come with the slight catch, making those with small account balances under $6,000, who are either below the age of 25 years or have inactive accounts for more than 13 months, opt-in for life insurance cover, which means that, while you might have to “plan” for something to happen to you, you won’t be automatically charged for cover.
So although the idea of actually making use of your super to go on a chill Caribbean cruise may seem like a distant reality, these changes will help make life better for future-you.
THE REGIONS!!!! (HELLO @ ALBANY CAMPUS)
Recognizing the plight of regional students, the Government has plans to have fewer cut off from youth allowance because of their parents’ income, spending $53.9 million over four years to increase the maximum parental income from $150,000 to $160,000 and change the way in which it is assessed. As such, for those having to move from the country to the big smoke to study, the Government just made life easier for you.
While for those still yet to commence their studies, the Government has plans to fund an additional 500 places for regional, rural, and remote students each year, as well as another 185 places for students commencing a Bachelor degree through a Regional Study Hub. Nice.
However, it is not all sunshine and rainbows for university students, with the university funding freeze remaining in place, and the number of Commonwealth-funded diploma, associate degree, and postgraduate coursework places being reduced, which means that if you were considering pursuing postgrad studies, it might be time to think again or pray you get a job asap after undergrad.
WOMEN in STEM
Helping to ensure that Australians have all the necessary skills for the future, the Government intends to spend approximately $2.4 billion over 12 years to boost the nation’s research, science, and technology capabilities. Part of this will used to further increase women’s participation in traditionally male-dominated STEM sectors by creating a ‘Women in Science Ambassador’ in addition to other programs that will encourage women to seriously pursue STEM related careers.
The Budget Reply
In his budget reply speech, surprising literally no one, Labor leader Bill Shorten said he’d outdo the Government in the amount of tax breaks for ordinary working Australians, and the amount of money spent in health and education. Classic Labor response, someone is writing good speech notes.
Besides Labor’s promise of delivering greater tax cuts to ordinary working Australians, this budget has (no doubt with multiple by-elections and a potential upcoming election in mind), sought to draw a line in the sand between the two parties, with the Coalition as the party of tax cuts and frugal government, and the Labor Party as the party of big spending and inefficient government. It does feel like re-runs of the same show we have seen for years, but hey, at least the Coalition had something in there for women in STEM.