This is what we know will be in the 2015 federal budget to be announced at 7.30 pm Tuesday:
The good news is that, according to Treasurer Joe Hockey, there are no new taxes in this budget, his second.
“You can’t tax your way to prosperity, you need to build,” says Hockey.
He means ordinary taxes. There could be news on changes to better capture more tax from international companies which do business in Australia but move the revenue to another country where the company tax rate is low or non existent.
“We are absolutely determined that people have to pay their fair share of tax,” Hockey says. “Where people are getting unfair advantages we’re going to bring that to an end.”
The bottom line
The budget deficit, which last budget was a life or death priority, will be presented as something which will take longer to fix, a more measured and less frantic progress toward a surplus.
Most market economists see the deficit as coming in higher than at the MYEFO, the mid year update in December. Deloitte Access Economics estimates an underlying cash deficit of $45.9 billion for the full year 2014-15, $5.5 billion worse than projected and little improvement from the $48.5 billion deficit 2013-14.
The tax collected will be down this current financial year against the latest official estimates. The shortfall in government revenue is expected to be more than $5 billion down on a forecast $385.8 billion.
Small business: The budget will reveal exactly how a planned 1.5 percentage point cut in tax will be applied to small businesses.
Startups: Better tax treatment of employee shares scheme so that startups can attract and keep talent. Promoting crowd sourcing and allowing the immediate tax writeoff of Legal and accounting charges in connection with establishing a startup.
The Netflix Tax: Revenue is being lost because the government can’t collect GST on services sold in Australia by companies based overseas. Expect a measure to capture virtual imports such as movies and tv shows from Netflix, ebooks, downloadable music and software. The government says there is a simple fix to the Tax Act to make this work.
The Google tax: Strengthening of a part of the Tax Act will attempt to recoup taxes payable in Australia by multinationals currently shifting profits offshore. Companies such as Google, Apple and Microsoft are likely to be affected although the government has not said how much the measure might raise in revenue. It is expected to apply from January 1.
Negative gearing: This is not to be on the agenda for this budget. Some point to this as a reason for rapidly rising house prices, especially in Sydney and Melbourne. Other says housing supply is still behind demand and that negative gearing helps encourage the building of more homes. However, it would be a big deal to change the current baseline philosophy governing tax deductions: if you have costs associated with producing an income, then that is a deductible expense.
GST: There’s a growing and credible movement pushing for increases to help fill government coffers. But this is something which will probably be taken to the next federal election and not for the 1015 budget.
Working for charities: A cap is going on the amount an employee can package and use to pay for personal spending. Salary sacrifice for meals and entertainment will be capped at $5,000 a year. Not for profits used the FBT concessions to help make up for lower pay.
Financial crime: $127.6 million over four years for a Serious Financial Crime Taskforce. This will build on the tax investigation work of Project Wickenby into tax dodging and extended to include other white collar crime.
Childcare: A $3.5 billion package, including better access to childcare. This will consolidate a raft of benefits and regulations into the one payment or concession. The government says the average benefit will be about $30 a week to help with child care wile parents work.
Nannies: A $246 million, two-year trial to subsidise the cost of hiring a nanny. Limited to families earning less than $250,000 a year. This is aimed at shift workers and those living in regional areas.
Parental leave pay: Saving $1 billion over four years by stopping people getting paid by both the government and by their employee. It will now be one or the other but not both.
Almost half (49%) of all voters in Australia are aged fifty or older. They don’t tend to vote as a block but any benefits they get, or lose, will have an impact at the ballot box.
Aged pensions: Saving $2.4 billion. Fewer people now will get a part-pension to supplement superannuation income streams. This is a tightening of eligibility with the assets which can be held, and still get a part pension, being reduced to $823,000 for couples from $1.15 million. The family home is still exempt. On the the other side of the equation, the maximum value of assets couple can have and still get a full pension rises to $375,000 from $286,500. And the plan to link pension increases to CPI has been axed. It’s back to the more generous average weekly wages.
Older workers: More incentives to employ over 50s and keep them in the work force. The budget will have detail on speeding up payments of up to $10,000 to employers who hire older workers. There will also be an incentive to stay at work for a few more years.
Changes to superannuation. Government spokesmen have been ruling out any changes. This will be a relief to the super funds industry which can continue planning based on current rules.
Pharmaceutical Benefits Scheme: $1.3 billion towards new medicines and vaccines but also expect that some drugs will become more expensive, mainly over-the-counter medicines such as paracetamol, aspirin and antacids,m as the government looks to save $3 billion over the next four years.
eHealth: Electronic health records for all Australian. If you don’t want to take part, you have to opt out.
Cancer: $600 million of anti-cancer measures, including a new cervical cancer test.
Dental: $200 million to improve access to dental health care.
Mental health: $300 million funding has been extended for not-for-profits such as Lifeline.
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