Budget Summary 2020

Budget 2020 – Economic Recovery Plan for Australia

Spending to stimulate the Australian economy was the focus of this year’s Federal Budget. The JobMaker Plan is the Government’s $74 billion response to support a stronger economic recovery and bring more Australians back to work. Tax cuts for individuals and business also play a major role in the recovery plan.
 
Here’s a ‘quick look’ at the announcements relating to superannuation, tax, business and social security. The measures outlined below are proposals only until legislated and are subject to change.
 

Tax 

Stage 2 of the Government’s Personal Income Tax Plan will be brought forward by two years from 1 July 2022 to 1 July 2020 resulting in:

  • 19% tax bracket will increase from $37,000 to $45,000
  • 32.5% tax bracket will increase from $90,000 to $120,000
  • The low-income tax offset will increase from $445 to $700
  • The low- and middle-income tax offset of up to $1,080 stays for 2020-21
The table below shows the tax savings available this year based on a range of income levels.

Business Stimulus

  • Businesses with annual turnover less than $5 billion will be able to deduct the full cost of eligible capital assets purchased from 6 October 2020 with a full deduction also available for second-hand assets for small- to medium-sized businesses.
  • Eligible companies (annual turnover < $5 billion) can carry back losses from the 2019-20, 2020-21 or 2021-22 years to offset against profits in 2018-19 or later years resulting in a tax refund to inject capital into the business.
  • JobMaker Hiring Credit will be available from 7 October 2020 for each additional new job created for an eligible employee who has recently been receiving JobSeeker Payment or Youth Allowance.  Employers will receive $200 per week if they hire an eligible employee aged 16 to 29 years or $100 per week for those aged 30 to 35 years. An additional $1.2 billion will also be provided by the Government to support up to 100,000 new apprentices and trainees.


Social Security and Aged Care

  • Two additional $250 lump sum payments will be available to eligible social security, veteran and other income support recipients and eligible concession card holders with the first payment available in early December 2020 and the second in March 2021.
  • An additional 23,000 home care packages across all package levels will be made available over the next four years.


Superannuation

  • Notably there was no mention of:
    • a third round of COVID-19 early release payments.
    • delaying the already legislated increase to Super Guarantee Contributions.
    • extending the 50% temporary reduction in minimum payments for retirement income streams beyond 2020-21.
  • The Government will provide $159.6 million over four years to implement reforms to superannuation to improve outcomes for superannuation fund members including comparison tools and mechanisms to reduce multiple super accounts when employees change jobs.