There wasn’t a lot of depth to this year’s budget. Wayne Swan warned us that it would be a tough budget, but it wasn’t that tough.
As David Pring, tax partner at Deloitte, explains in today’s BTalk, the central planks of the government’s economic policy are all missing — the mining tax and carbon tax are yet to happen, and there is a review of tax slated for October (they have budgeted close to a million dollars for a two day forum to discuss it). Given they all have sizeable impacts this was always going to be a budget that was more about tinkering at the edges.
Still, that tinkering amounts to $20 billion in cuts, required to turn a government deficit into a surplus by 2012-13. Getting back to surplus will be helped by a forecast growth in GDP, up to 4 percent in 2011-12, well above the current 2.25 percent.
Some of the items that might impact you:
- The dependent spouse tax offset will disappear from 1st July 2011 — that could make some people a couple of thousand dollars worse off
- FBT on car travel will increase to 20 percent (from 7 or 11 percent) for anyone who drives more than 25,000 kms (unless they apply the log-book method)
- From 1st July 2012, an immediate small business tax deduction for the first $5,000 of any capital items, such as a new car
- Reducing the unearned income a child can receive tax-free from $3,333 to just $416 — to cut down on the use of family trusts to reduce tax liabiltiies
- Freezing of upper limits on superannuation contribution levels and the upper income limit for family payment eligibility. In both cases read “freezing” as meaning “gradual decline” in line with inflation.
- Of course it was a tough budget for those who always expect tax cuts. There were none of those, perhaps because this isn’t an election year.