The 2019 Federal Budget will be handed down tonight and is expected to contain a number of measures intended to strengthen the economy. Despite the government’s recent report of a budget surplus in the billions, the cost of living is rising, property values are decreasing, and the GDP per capita is on the decline throughout Australia. As such, economists are predicting a stimulatory budget.
It is forecasted that the government will unveil tax cuts, whether through changing income bands, altering rates or some combination thereof. Additionally, there has been mention of improvements to tax offsets for low-income earners or the provision of first home buyer grants.
Treasurer Josh Frydenberg has announced record funding for both ASIC and APRA intended to “help restore trust in Australia’s financial sector.”
The coalition government is giving ASIC more than $400m in additional funding, up 25% compared to 2017-18. APRA will be provided with $150m in additional funding, up 30% from last year.
The aim is for both regulators “to strengthen their approach to enforcement” and carry out expanded services in accordance with the royal commission recommendations.
SME taxes are expected to be reduced, and instant asset write-offs to be extended to June 2020 and upped to $25,000.
However, according to data provided by accounting software provider Reckon, 65% of small business owners do not believe the 2019 federal budget will have a positive impact on their business, “suggesting that they have been disappointed by budget announcements in the past.”
Additionally, only 11% think that the government is doing enough to address the tighter mortgage assessments imposed by traditional banks for small business loans.
Research commissioned by Scottish Pacific has revealed that SMEs are far more concerned about governmental action that may affect their day-to-day business, rather than larger-scale initiatives.
The data revealed that SMEs are unconcerned about the extension of legislation designed to ease late payment times or the implementation of the $2bn SME lending fund, despite the conversational focus on those measures.
“Over the past six years, the SME Growth Index has repeatedly highlighted that company tax cuts and a reduced regulatory burden are the most pressing reforms SMEs are crying out for. Nothing has changed this round,” said Scottish Pacific CEO Peter Langham.
Reverse mortgages & self managed super funds (SMSFs)
Last year’s federal budget made a reverse mortgage worth up to $11,799 per year available to every homeowner over the age of 65 for the rest of their lives, allowing cash poor Australians to benefit from the value tied up in their homes.
The maximum limit on SMSF members was set to rise from four to six as of 1 July 2019, helping small business owners and families operating an SMSF. Additionally, the compulsory annual audit report was changed to a three-yearly requirement for SMSFs with a history of sufficient record-keeping and ATO compliance, also as of 1 July 2019.
It is unclear what further changes impacting retirees may occur.
More information to come once the budget is released this evening.