Highlights from the 2015 / 2016 Federal Budget
The Budget announcement was as expected including the previously announced flagship policies of child care and parental leave, FIRB fees for foreigners, aged pension reforms and increased spending on national security having been flagged well in advance.
The 2015 Budget provided Australia with the realisation that a deficit is expected beyond 2018. The current year deficit sits at $35.1 billion.
The good news is that, as expected, there is no new taxes for Australian business and there have been substantial concessions for small business with turnover under $2 million. However, bracket creep will mean that the average rate of tax will increase for individuals.
The imposition of GST on digital products and services from 1 July 2017 is expected to raise $350m over the first 4 years. This will create a level playing field for Australian business competing in this space.
Strong links to foreign countries like China are evident with Joe Hockey explaining “for every dollar we spend buying Chinese goods and services, the Chinese spend two dollars buying our goods and services”. This reliance has impacted Australia’s deficit as falling iron ore prices impacted Australia’s revenue for the financial year.
It will be interesting to see how foreign investment in Australia will be impacted by the introduction of FIRB application fees on all real estate, business and agricultural foreign investment. These proposed fees will apply from 1 December 2015 and are estimated to raise $735.0 million in revenue over the forward estimates period.
Foreign investors looking to acquire residential property will now be hit with a $5,000 application fee for properties valued under $1 million which will then increase to $10,000 for property over $1 million (an additional $10,000 for every additional $1 million).
In addition, the proposed Victorian 3% land transfer duty surcharge for foreign buyers (from 1 July 2015) and 0.5% absentee landowner surcharge (from 2016 land tax year) may see foreign investors focusing on other states to acquire property.
The small business package includes a variety of measures that should help the 2 million small businesses, the most significant of these are:
A $4.4 billion Families Package will reform the child care system to make it simpler and improve the affordability, accessibility and flexibility of child care, to support parents who choose to participate in the workforce.