Last night the Government announced their 2020 Federal Budget. We break down what you need to know, what these changes mean for you and how to supercharge your goals!
WHAT YOU NEED TO KNOW & WHAT IT MEANS FOR YOU
- Income tax cuts scheduled for 2022 will be brought forward for most income brackets
- The low and middle income tax offset of $1,080 will remain in place for the 2020-21 financial year.
If you’re earning:
- $45-90k your tax cut will be $1,080 p.a.
- $120k+ your tax cut will be $2,500 p.a.
- Depreciating Assets – If your business turns over less than 5 billion per year, you are now able to offset the full value of any assets you purchased after budget night and before June 22. The measure expands the popular instant asset write-off, previously only available to small and medium businesses.
- Carry back tax losses – Business’ that have suffered due to the pandemic this year, will now have the ability to carry back tax losses and offset them against profits made from year 18/19 onwards.
- Reduce multiple fees and accounts – Employers will be able to access your existing superfund details via the ATO rather than setting up default accounts for new employees reducing the amount of Super funds and Super fees paid by employees.
- Fund performance tests – By July 2021 MySuper products will need to do an annual performance test and notify members each year if their fund underperformed. The Government will also release an online comparison tool called YourSuper that will help members compare the fees and returns for super funds.
- Additional Funding – To help look after vulnerable Australians, there will be additional funding for the National Disability Insurance Scheme, mental health and suicide prevention, and the Pharmaceutical Benefit Scheme.
Grow the economy – Funding $1.5 billion over five years from 2021/2022 to support the building of competitiveness, scale and resilience in the Australian manufacturing sector. It will focus on creating jobs opportunities in sectors such as manufacturing, infrastructure, medicine, recycling, food, defence, farming and tourism.
- Employment initiatives for women – Funding $240 million over four years towards a range of employment initiatives for women. Including a focus on increasing female workforce participation in male-dominated industries such as construction.
Age Pension & Welfare
- Additional payments – People who are currently receiving certain eligible income support payments and concession cards will receive two additional payments of $250, to be paid in December 2020 and March 2021
Childcare support (or lack there of)
- Disappointingly, this years budget failed to deliver significantly on what many economists are saying is vital for women’s economic participation: affordable and accessible childcare.
*The above updates are simply proposals and will need to be passed by parliament to be legislated.
SUPERCHARGING YOUR GOALS
Here are a few case studies demonstrating how the personal tax cuts can be used to supercharge your goals!
Mortgage Debt Reduction
You have a mortgage debt of $600,000 with 3.5% interest for a loan period of 25 years.
- An extra $90 per month ($1,080 per year) = mortgage paid off 14 months sooner.
- An extra $208 per month ($2,500 per year) = mortgage paid off 2.5 years sooner.
- You’re earning $45-90k per year and receive an annual tax cut of $1,080. You regularly deposit these funds into an account for 10 years earning 7% interest.
- You’re earning $120k+ per year and receive an annual tax cut of $2,500. You regularly deposit these funds into an account for 10 years earning 7% interest
Want to chat with Jess or Glen about your personal financial situation? Book in a 15min chat 📲