2021-22 Federal Budget: What does it mean for you?

The Federal Government has handed down the 2021-22 ‘Securing Australia’s Recovery’ Budget, with the Treasurer unveiling big-spending with millions of Aussie’s set to reap the benefits.

The Australian economic rebound from COVID-19 has allowed the government more money to play with then expected, but debt still looms on the horizon.

The 2021 Budget contains billions of dollars dedicated to tax cuts for individuals and businesses, measures to support women, assistance for young Aussies seeking work, as well as funding for crucial industries such as aged care, disability care, infrastructure, and skills training.

“Australia’s economic engine is roaring back to life”, declared the treasurer,  but while he noted it’s not all down to luck, he has been blessed with record iron ore prices boosting the Budget balance sheets.

Are you a Business Owner?

The government is looking to lighten both tax and regulatory burdens, encouraging businesses to hire more employees.

The Corporate tax rate will drop to 25 per cent from 1 July 2021 (down from 30 per cent in 2014-2015).  

Other measures like temporary full expensing and temporary loss carry-back are being stretched to include the 2022-23 financial year. By extending this measure, businesses are expected to pay $20.7 billion less tax over the forward estimates period; support $320 billion in investment; create 60,000 jobs by 2022-23, and boost GDP by $18 billion by July 2023.

Summary of the 2021-22 Budget

Business

Temporary full expensing for businesses with a turnover below $5 billion extended for 12 months. Eligible businesses also able to deduct the full cost of assets, with loss carry back also extended

• Tax relief for around 1,000 small brewers and distillers.
• $2.1 billion in targeted support for aviation, tourism, the arts and international education providers

Jobs

• Employers will be given an extra $1.5 billion to hire 100,000 apprentices and trainees in the next year as the government extends one of its most successful job creation programs for the second time.
• In total, over four years, 270,000 new apprentices and trainees are expected to be hired under this wage subsidy scheme by March next year.

Infrastructure

• $15.2 billion over ten years for infrastructure projects across the country.
• $3.2 billion for NSW including $2 billion for upgrades to the Great Western Highway between Katoomba and Lithgow.
• $3 billion for Victoria including $2 billion for a Melbourne freight terminal designed to get thousands of trucks off the road.
• What you should know – there is no single, transformational infrastructure spend in this budget but a careful and conservative approach.

Education

• $2 billion in funding for preschools and reforms to improve participation
• A total of $19 billion in funding for universities
• 5000 more places in higher education short courses

Income Tax

• $7.8 billion to extend the tax relief for 10.2 million people who are low and middle-income earners through the LMITO.
• This extension is worth a maximum of $1080 for individuals and $2160 for couples. The maximum benefits will flow to people on between $48,000 and $90,000 per year.

Economy

• Economic growth will be 1.25 per cent in 2020-21 and reach a strong 4.25 per cent in 2021-22 before falling to 2.5 per cent the following year.
• Unemployment has defied doomsday predictions of 8 per cent or more and is predicted to be 5.5 per cent this year. Next year it will fall to 5 per cent and then 4.75 per cent in 2022-23.
• International borders will begin to re-open in 2022 but inbound and outbound travellers will remain at very low levels until the middle of 2022 at the earliest.

Debt & Deficit

• The 2020-21 deficit has been revised down by $52.7 billion from $213.7 billion to $161 billion, a massive improvement because of higher employment rates and a higher-than-forecast iron ore price.
• In the three years from 2021-22 deficits have been cumulatively revised down another $29.4 billion – but will still add up to $285.4 billion.
• Net debt is now expected to peak at $980.6 billion in 2024-25, or 40.9 per cent of GDP. That’s a revision down of debt reaching 44 per cent of GDP projected in last year’s budget.

COVID-19

• Another $1.9 billion for the rollout of COVID-19 vaccines
• Another $1.5 billion for COVID-19 health care services, taking the total spend to $20 billion on the vaccine rollout and the health system more broadly.
• Government to invest in mRNA vaccine manufacturing capability onshore. Negotiations are under way with private companies

Women & Families

• An additional $1.1 billion will be spent on women’s safety measures, including $261.4 million over two years in a new deal with the states to boost frontline family, domestic and sexual violence services.
• There’s $351.6 million in funding for new health measures including more cash for drugs to fight breast cancer, lung cancer and osteoporosis and for women’s health initiatives that cover maternal, sexual and reproductive health. There’s also money for endometriosis research and genetic testing for pregnant women.
• $1.7 billion over five years in extra money to cut the cost of childcare for families with two or more kids. Measures will boost the childcare rebate and remove the annual subsidy cap of $10,560 for high-income earners, aiming to get both parents back into full-time work by removing the disincentive of high childcare costs.

Aged Care

There is $17.7 billion over five years responding to the Aged Care Royal Commission report on abuse and neglect in the system, including:

• $6.5 billion for an extra 80,000 home care packages over two years, to help more people live in their homes for longer.
• $3.2 billion to cover a $10 per person, per day increase in payment to aged care providers.
• $3.9 billion to increase the number of “care minutes” each aged care resident receives per day to 200 minutes.

View the full report here.