Budget 2016-2017

WINNERS

Small and Medium Enterprises – From July 1, businesses with a turnover less than $10 million will see their company tax rate cut to 27.5% from 30%. They’ll also get tax write-offs to buy equipment such as computers, coffee machines or even cars up to the value of $20,000. The company tax rate will drop to 25% for all businesses over the next 10 years.

Working Parents – The Government has held off implementing the childcare subsidies, which were a major sweetener in last year’s budget.

High- and Middle-Income Earners – A personal income tax rate of 37% will kick in at $87,000 from July 1, instead of the current $80,000 — benefiting about 17% of income earners. Those earning over $180,000 — the top 3% — will get a further 2 percent cut as a levy intended to repair the deficit expires.

Low-Income Earners – People earning less than $37,000 will get a tax refund worth up to $500 a year to help them save for their retirement. The government will make it easier to top up a spouse’s superannuation fund.

Unemployed Youth – The government will offer 120,000 internship places over four years for out-of-work youngsters. Firms that take on such interns will get a $1,000 payment.

Other winners include:

  • The defence industry. The government will spend $142.9 billion on defence over four years.
  • State governments will get federal funds for road and rail projects.
  • Bitcoin users will no longer be “double taxed” when buying goods and services already subject to the GST, under a new government proposal.
  • Vineyards will gain under a $50 million initiative to promote Australian wine and wine tourism.
  • Schools will get an additional $1.2 billion, while hospitals will receive an extra $2.9 billion

 

LOSERS

Multinational Companies – The government is going after multinational companies that seek to avoid tax in Australia. Income that big corporations shift offshore will be taxed at 40% instead of the usual 30%. A 1,000-strong taskforce will be set up to prosecute multinationals and the ultra-wealthy not paying the tax they should.

High-Income Earners – The government is cutting several tax concessions for the wealthiest Australians saving for their retirement. From July 1, 2017, anyone earning over $250,000 will pay 30% tax on their superannuation contributions instead of 15% — a regime that currently kicks in at $300,000.  The amount people can contribute into their superannuation funds each year at a concessional tax rate is now capped at $25,000, down from as much as $35,000. The government is proposing a new lifetime cap of $500,000 on non-concessional contributions, while a maximum of $1.6 million can be transferred tax free into retirement.

Smokers – The cost of cigarettes — currently about $1 a hit — will just keep on going up. Tobacco excise will rise by 12.5% a year for four years from Sept. 1, 2017 — raising an additional $4.7 billion. The duty-free tobacco allowance will be halved to 25 cigarettes.

Other budget losers include:

  • The nation’s banks will help pay for $127 million in extra funding to combat misconduct in the financial services industry.
  • The public service faces more job cuts as the government seeks to drive efficiency
  • Welfare recipients will face greater scrutiny before receiving payments.

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