Treasurer Joe Hockey’s 2015 budget is throwing a $5.5 billion package of tax cuts and concessions at small businesses.
And jobs growth will follow, according to Hockey, presenting his second budget. Small businesses is something he knows a bit about. He grew up in a small business family.
“That small business put a roof over our heads. It paid the bills. It gave all of the family a chance at a better life,” he told Parliament in his budget speech.
Hockey sees Australia’s future in these mum and dad businesses, the corner stores, the startups, the coffee shop, the sole traders and the entrepreneurs.
“Our future growth will come from growing small business into big business,” he say. “Every big company in the world started small.”
Small businesses employ more than 4.5 million people and represent about one-third of Australia’s economic output.
Hockey also hasn’t changed his timetable for a return to a budget surplus despite falling tax revenue.
Tax receipts have been downgraded by $52 billion since the 2014 Budget. More than $20 billion of these write-downs are a result of the fall in the price of iron ore.
The forecasts are underpinned by an iron ore price of $US48 a tonne (compared to the current market price around $US60). The forecast in the 2014-15 budget was $US96 a tonne.
According to budget forecasts, the deficit reduces every year from $35.1 billion in 2015-16 to $6.9 billion in 2018-19.
Key budget measures:
$5.5 billion including $5 billion of tax cuts. Small businesses with annual turnover below $2 million will have a 1.5 percentage point cut in company tax to 28.5%. About 96% of all Australian businesses fit in this band. Small unincorporated businesses get a 5% tax discount up to $1,000 a year.
Small businesses will also be able to immediately claim a tax deduction for an asset costing less than $20,000 which is purchased between budget night and June 30, 2017. There is no cap on this program. Hockey wants businesses to go out and spend and hire people.
Start-ups will now be allowed to deduct professional expenses, such as setting up a company structure or paying an accountant, immediately they start a business.
Obstacles to crowd-sourced equity funding will be removed and tax concessions for Employee Share Schemes will be expanded.
Aimed at youths at risk of long-term welfare dependency. More than $330 million, including a new $212 million Youth Transition to Work program. And an additional $106 million of intensive support trials for job seekers of all ages who are facing the most significant barriers to employment.
A $4.4 billion funding boost including $3.5 billion to make child care simpler. Families earning $65,000 or less will receive a subsidy of 85% of child care. The subsidy tapers to 50% for families earning $170,000 or more. There will be no annual cap for families earning less than $185,000 and those earning more will have a $10,000 annual cap per child each year. This is $2,500 more than the current Child Care Rebate annual cap per child.
$843 million in preschool programs to ensure children have a strong start and a bright future.
A two-year, $250 million trial of support for eligible families using nannies starting January 2016. This will pay about 4,000 nannies around Australia. This is aimed at shift workers such as nurses, police, firefighters and ambulance officers who can’t get government supported child care. To be eligible, family income must be below $250,000.
From January 2016, the No Jab, No Pay rule will remove all exemptions, excluding those for medical reasons, for access to child care payments and the Family Tax Benefit. More than 39,000 children aged under seven in Australia are not vaccinated because their parents are objectors.
Fringe Benefits Tax on all portable electronic devices used for work, such as mobile phones, laptops and tablets, is being abolished. This means they can effectively be paid for with pre-tax income.
No new taxes on superannuation.
The so-called Google tax aimed at multi nationals shifting revenue offshore to low tax countries rather than pay tax in Australia where the money was earned. The budget outlines new legislation, the Multinational Anti Avoidance Law. Those caught “cheating” will have to pay back double what they owe, plus interest.
There is also new legislation to deal with the lost GST on online sales with sellers outside Australia. This will level the playing field for Australian businesses by mandating that foreign businesses supplying digital products and services are subject to GST.
Removing so called double-dipping from Parental Leave Pay. Parents will only be able to claim one set of pay, either from their employer or from the government.
A crack down on people avoiding Higher Education Loan Program debt by working overseas.
A $5,000 a year cap on salary packaged meal entertainment benefits in the not-for-profit sector from April 2016. This will bring an estimated revenue gain of $295 million over the forward estimates. Workers in these sectors will still be eligible for FBT concessions.
Fly-in-fly-out and drive-in-drive-out workers will be excluded from the Zone Tax Offset from July. This will have an estimated revenue gain of $325 million over the forward estimates. About 20% claiming the tax concession don’t actually live full-time in the zones.
Terrorism and Defence
$1.2 billion in new funding for national security, on top of $1 billion of funding announced last year. An extra $450 million for intelligence capabilities.
$750 million for military operations. Extending and expanding Australia’s military operations in Afghanistan, Iraq and the Middle East.
More than $500 million has been saved from closing detention centres and on the costs of processing new boat arrivals.
New drugs, some of them expensive cancer treatments, added to the Pharmaceutical Benefits Scheme at a cost of $1.6 billion.
More Budget Coverage:
- Here are the key budget numbers you’re looking for
- ANALYST: The budget ‘hung the economy out to dry’ and more rate cuts are needed
- This debt chart shows the Abbott government squibbed the tough decisions in the budget
- 31 things you need to know about the federal budget
- Here’s what Australia’s startups think of the stimulus plans in the federal budget
- MYOB’s CEO says the $20K startup gift will be ‘phenomenal’ for Aussies
- All the government programs that have been cut in Australia’s federal budget
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