Australia’s government on Tuesday unveiled an election-focused budget to shore up economic growth amid a rocky transition from dependence on mining, doling out tax cuts for individuals and businesses.
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Happy with the budget, broadly speaking, are business groups, farmers and the Australian Tax Office, which gets a bright new taskforce to tackle tax dodgers.
The 27.5% tax rate will subsequently be extended to more businesses, with the threshold increasing from $10 million to $25 million in 2017-18 then to $50 million in 2018-19 and $100 million in 2019-20.
The government is cutting several tax concessions for the wealthiest Australians saving for their retirement.
Small and medium-sized businesses are among the winners from the federal budget for the second year in a row.
Eventually, all companies will benefit from a reduction in the company tax rate to 25 per cent over the next 10 years.
Mr Morrison steered clear of a pre-election spend-up on the day the Reserve Bank made history with its first ever budget day interest rate cut, to an all-time low of 1.75 per cent, with the Treasurer instead seeking to strike a balance between revenue-raising measures and tax relief.
While these measures deal with business and consumers here and now, other measures, such as clamping down on multinational tax avoidance, and reducing superannuation benefits for Australia’s top earners appear to address elements of unfairness that are embedded in the Australian tax system.
As part of the plan, the Federal Government aims to increase the size of the economy permanently by over 1 percent through jobs creation.
Prime Minister Malcolm Turnbull is expected to call the July 2 election by the end of this week.
The 2016 Budget delivers on this plan through a ten year enterprise tax plan to boost investment and create and support jobs.
Inland Revenue hadn’t signalled the need for a DVT and the Australian budget would cause the New Zealand government to “stop and reflect”, he forecast.
Mr Morrison said the changes had “generated some $6 billion in additional revenue” that will be used to fund lower taxes for “hard working families” and small to medium-sized businesses.
“This will mean by 2020, more than half of all employees of companies in Australia will be in companies paying a lower tax rate of 27.5 per cent”, Morrison said.
“The economic plan we have announced tonight will back them in to do more”, claimed Morrison. They will be in the middle income tax bracket with all other average wage earners.
“We’ve seen some good measures from the Australian Government, including a commitment to inland rail, which will make a significant difference to the competitiveness of Australian farmers. The cuts in corporate tax over the next decade are very welcome”.
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For multinationals with global incomes of more than A$1 billion, the maximum penalty for failing to file proper tax documentation on time has been raised from A$4,500 to $450,000.
