Click here to download the 2011 Federal Budget Review.
2011 Budget Review
Is this a Budget for a two speed economy? Or is the Government just spinning.....
The Government has handed down a Budget that will get back to surplus in 2012 – 13 and get more people into jobs. To achieve the surplus, it proposes to make $22 billion in savings and restrain real growth in spending.
To get more people into jobs it proposes to spend more on training apprenticeships and incentivising employers. The Government doesn’t explain how more training will encourage people to go to work, especially in remote mining communities. One of the solutions is to remove the dependent spouse rebate to encourage non working spouses into the workforce and providing more choices for child care payments. How this affects the family unit and other social issues is yet to be seen.
The tax measures introduced are minimal and there are no surprises.
The company income tax rate for small business will reduce to 29% from 2012 – 13 year, two years earlier than for other companies. However it does not help businesses who operate through partnerships and trusts.
What is disappointing is that the $2 Million threshold for small business hasn’t been increased. A failure by the Government to keep up with the changing times.
Supposedly Small Business will be pleased with the $5,000 immediate write-off for the purpose of assets. However, this is only a timing difference and will be off-set by the increase in statutory rate used to calculate FBT on motor vehicles. The statutory rate of 20% has to be used to calculate the FBT regardless of kilometres travelled, this is supposed to discourage people driving their cars.
What will have an impact on Small and Medium Business (SMEs) operating in trust structures is the removal of the low income offset for minors receiving unearned income.
Where there are two minors receiving distributions this change could potentially increase a families’ tax bill by over $3,000.
Fortunately, there are no major tax changes impacting large companies.
The aim of the budget is to return to a surplus and get people back into the workforce. Whether restraining expenditure and spending billions on training and incentives will achieve this, time will tell.
Further details on the Budget can be found in this review and we encourage you to contact your nearest RSM Bird Cameron Office to discuss the issues that may affect you.