Government Budget 2020: Tax Cuts, 'JobMaker' and a $213.7 billion deficit

author-avatar By on October 06, 2020
Government Budget 2020: Tax Cuts, 'JobMaker' and a $213.7 billion deficit

Source: Prime Minister Scott Morrison Twitter

Tonight the Government announced its Budget for 2020-2021, with tax cuts forming a large part of the agenda to tackle demand-side doldrums in the economy.

Tonight Treasurer Josh Frydenberg announced the Federal Budget is in a $213.7 billion deficit.

Net debt will increase to $703 billion or 36% of GDP this year, and reach $966 billion, or 44% of GDP by June 2024.

The Treasurer also announced that the Government will bring forward 'Stage 2' tax cuts, two years early, and backdated to 1 July 2020.

Under Stage 2, the 19c threshold will be raised from $37,000 to $45,000, and the 32.5c threshold will be lifted from $90,000 to $120,000.

The Low and Middle-Income Tax Offsets will also be retained for another year.

Treasury estimates those earning $80,000 will pay 11% less tax this year, with lower-income earners getting up to $2,745 (for singles) back in their pocket.

While widely tipped to be brought forward, Stage 3 legislated for 2024-25 was off the agenda tonight.

More details below.

JobSeeker, JobKeeper, now JobMaker

The fifth Beatle, JobMaker is a hiring credit that will be payable for up to 12 months, immediately available to employers who hire those on JobSeeker aged 16-35.

It will be paid at a rate of $200 a week for those under 30, and $100 per week for those between 30 and 35.

New hires must work for at least 20 hours a week, and all businesses, other than the major banks, will be eligible.

Treasury estimates that this will support around 450,000 jobs for young people.

Additional Payments for Aged Pensioners

Aged pensioners will receive a total of $500 over the next five months, with $250 paid in December, and an additional $250 paid in March 2021.

This is similar to what was seen with the $750 payments earlier this year.

Instant Asset Tax Write Offs and Business Stimulus

The instant asset tax write off for businesses is also being extended to include 99% of businesses.

Now, businesses will be able to write off the full value of any eligible asset, for businesses up to $5 billion in turnover through June 2022. 

Losses incurred to June 2022 can also be offset against prior profits made in or after the 2018-19 financial year.

First Home Buyers and Public Housing

One billion dollars in low cost finance is in the Budget to support the construction of affordable housing.

Approximately $150 million will also go to an Indigenous Home Ownership Program to construct new homes in regional areas.

Superannuation

The Treasurer also announced that new super accounts won't be created automatically every time a worker changes jobs.

Under prudential regulation, super funds will also be required to meet an annual performance test.

"At $30 billion a year, the superannuation fees Australians pay exceeds the cost of household gas and electricity bills combined," Treasurer Josh Frydenberg said.

"Australians today are paying $450 million a year in unnecessary fees as a result of 6 million multiple accounts."

The Government will also introduce its own superannuation comparison tool called 'YourSuper'.


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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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