Deloitte tax partner Patrick McCalman said one upshot of the budget was that the Australian tax system was looking “more unappealing for multinationals looking for a home in the Asia-Pacific region”.
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A return to a balanced budget is still years away, however, with no return to surplus in the four-year forward projections released with the budget.
“Our new spending offsets have been more than offset by our spending restraint”, Mr Morrison says.
Growth is forecast to remain steady at 2.5 percent in the next fiscal year and accelerate to 3 percent in 2017-18.
Where the 2014 budget appeared to shock and disappoint the community with broken promises and tough measures, the 2016 budget unveiled by Morrison seems to be the very antithesis of its 2014 predecessor.
“Australian people have moved on from that, they are interested in a plan for transitioning the economy”, Morrison said.
The Government is planning on redefining what constitutes small business by increasing the turnover threshold from $2 million up to $10 million, which will reduce the tax bracket a lot of formerly medium sized businesses were in.
Starting from 1 July this year, the tax rate for small businesses will be reduced from 28.5 percent to 27.5 percent.
The Budget deficit for next year was estimated at A$37.1 billion (S$37.7 billion), slightly less than this year’s A$39.9 billion.
The ATO will target firms with global revenues above $1 billion who appear to be paying less than 80 percent of the tax they would otherwise owe in Australia in their offshore destination, and where the Aussie tax man says it is “reasonable to conclude” its corporate structure has been created to secure a tax cut. “Based on analyses of the benefits of previous tobacco tax increases, 320,000 smokers are likely to quit over the longer term as a result of an expected series of 12.5% annual tobacco tax increases”.
“I’m not placing any more on that than what I have just said – they are just projections and how those projections turn out in the years ahead will depend on how we continue to perform as a nation”, he said.
There will be a $500,000 lifetime cap on non concessional super increases.
The government has put about half of the savings back into superannuation. The new rules will commence on July 1, 2017.
The budget played down funding for schools and hospitals, reiterating a deal signed with the premiers to deliver an extra $2.9 billion over three years for health and a $1.2 billion education funding top-up between 2018 and 2020.
Speaking at the National Press Club on Wednesday, Mr Morrison said people earning less than $80,000 were beneficiaries of earlier tax relief efforts, including being able to keep the carbon tax compensation payments introduced under the Gillard government even after the Abbott government abolished the carbon tax.
The job seekers will get $200 a fortnight while interns, on top of their ordinary income support.
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“Everyone has to pay their fair share of tax”, Mr Morrison told Parliament.
