When announcing the 2021-22 Federal Budget, Treasurer Josh Frydenberg praised the relative resilience of the Australian economy during the COVID-19 pandemic.
He noted that Australia’s economy contracted by 2.5% over the past year – the end of a long growth streak, to be sure, but a much smaller dent than those in the economies of the UK, France and Italy, each of which contracted by more than 8%. As part of the Government’s ongoing recovery plan, the Treasurer promised multiple tax cuts.
First, the low-and-middle income tax offset will be in force for another year, meaning those earning less than $126,000 per annum will be be entitled to up to $1,080 on their tax return. Based on Budget estimates, this will boost Australia’s GDP by approximately $4.5 billion.
Small and medium businesses will see their tax rate reduced from 30% to 25%, and temporary full expensing will be extended until mid-2023.
Other headline measures included an additional $1.9 billion to the COVID-19 vaccine rollout, support for the aviation and tourism industries, $2.7 billion invested in the Government’s skills and training program JobTrainer and $1.7 billion aimed at increasing the affordability of childcare.
Absent from all of this is are any specific measures aimed at increasing the affordability, availability or sustainability of financial advice – despite the ongoing projects to address this issue both by Treasury and ASIC. So, no, it doesn’t look like there will be a wage subsidy for practices employing Professional Year students.
Speaking of ASIC, the regulator will see its total resourcing fall from $772 million to $716 million this year, and this number is expected to fall further due to the Modernising Business Registers (MBR) program which will see ASIC’s business registry functions transferred to the ATO. How this will impact the recently-increased industry funding levy is not yet known.
On the super side, the Government is removing the $450 minimum earnings threshold for payment of the superannuation guarantee as well as the work test for super contributions made by those aged 67-74. The Pension Loan Scheme has also been modified to allow immediate access to lump sums of about $12,000 for individuals and $18,000 for couples.
In a statement, ASFA CEO Martin Fahy said the enhanced PLS “has the capacity to improve consumer outcomes by increasing competition and lowering costs.”
Also of note is the Government’s significant investment in aged care, something Business Health principal Terry Bell highlighted as an entry-point into a multi-generational financial advice model in our special feature on the topic.
Frydenberg said the $1.7 billion being invested in aged care was influenced, partly, by the “shocking cases of neglect and abuse” highlighted in the Royal Commission into Aged Care Quality and Safety. The funding will include 80,000 home care packages, additional payments to residents, 33,000 new training facilities for personal carers, retention bonuses for nurses and upgrades in aged care infrastructure.
Closing off his speech, Frydenberg said the 2021 Budget “will ensure we come back even stronger, securing Australia’s recovery.”
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