As expected, Wayne Swan’s third budget is a conservative and cautious affair, aimed at steering Australia back towards a budget surplus as quickly as possible.
Here is quick rundown of the highlights of the 2010 Federal Budget:
- The main initiatives for small business were previously released as part of the Government’s response to the Henry Tax Review. These include a reduction of the corporate tax rate from 30% to 28% and the immediate write-off for assets costing less than $5,000. Both will come into effect from July 1, 2012.
- The Budget will be back in surplus three years earlier than expected thanks to Australia’s fast-recovering economy. While the fiscal deficit in 2010-11 is expected to be $39.6 billion, a surge in Government tax receipts will see the Budget return to a $2 billion surplus in 2012-13.
- The Government has forecast the economy will grow by 3.25% in 2010-11 before accelerating to 4% in 2011-12.
- Treasury says unemployment peaked at 5.8% last year and will now fall to 4.75% over the next four years, indicating the Australian economy is close to full employment.
- The Government has delivered the third tranche of tax cuts promised in the 2007 election campaign. The 30% tax rate has been raised for all taxpayers from $35,000 to $37,000, saving the average taxpayer $200 a year.
- The Government will introduce a standard deduction clause for taxpayers that will allow taxpayers to deduct $500 of work-related and tax agent expenses from 2012-13, with the allowance rising to $1,000 from 2013-14. The Government predicts 6.4 million people could use this option.
- The Government will spend more than $660 million in training, apprenticeships and adult literacy and numeracy programs over the next four years. Initiatives included 39,000 additional training places in high-demand sectors, plus support for 22,500 apprentices.
- The rules under which listed companies can issue bonds to retail investors will be simplified in a move designed to provide companies with an alternative to bank finance.
- The Government will encourage savings by providing a 50% tax discount on the first $1,000 of interest earned on deposits, bonds, debentures and annuity products.
- The Government will spend $125.2 million over the next eight years to create a single national online registration system for business names and Australian Business Numbers, meaning businesses will no longer need to be registered in each State and Territory.
- As foreshadowed in the Government’s response to the Henry Review, a new $700 million infrastructure fund will start in 2012-13 and spend $5.6 billion over the next decade – funded by the Resources Super Profits Tax. The Government will also spend $1 billion to improve rail capacity.
- An extra $2.2 billion for improved access to GPs, more money for nurses and $467 million for an e-Health system.
- The Government will also phase down the interest withholding tax rate on interest paid on offshore borrowing to encourage foreign institutions into the market.
- Small businesses that account for GST on a cash basis will be allowed to claim input tax credit upfront in relation to hire purchase agreements.
- The Government will spend $2.7 million to improve access to mediation for those operating under the Franchising Code of Conduct, the Horticulture Code and the Produce and Grocery Industry Code.
