It is important to note that, upon reading the papers summarising the budget, there are two things that we look towards.
Budget 2021-22 – A continued win for small business
It is important to note that, upon reading the papers summarising the budget, there are two things that we look towards.
Firstly, it is all about how much the government will spend over the next year, and how much it will receive. It’s important to know what the numbers will look like, but the Budget numbers are an overall number that we take into the future and work with,
The government only has some impact on these numbers, for example, the price of iron ore is set by the market and has a massive impact on the government’s revenue. As iron ore goes up, the miners make more money and pay 30% of those increased profits in Australian tax. At the moment, iron ore prices are booming.
Australia’s GDP is current evidence that, as a country, we are recovering well from the events of the previous twelve months. The GDP grew strongly over the latter half of 2020, marking the first time in records that Australia has experienced two consecutive quarters of economic growth above 3%. Though this has led to recorded lower unemployment rates, it is also without any recorded wages growth.
From a fiscal point of view, the underlying cash balance is now expected to be a deficit of $106.6 billion in 2021-22, compared with a deficit of $112.0 billion at the 2020-21 Budget. The Budget position is expected to improve over the projected estimates of an expected deficit of $57.0 billion in 2024-25. Over the medium term, the underlying cash balance is projected to improve to a deficit of 1.3% of GDP by 2031-32.
Secondly, after understanding the numbers, the legislative changes that will impact Australians are also present in the Budget and need to be understood. These can be changes to tax rates, changes to what is and what is not ‘tax deductible’, or any other changes to the rules relating to taxation.
We have published a summary of a number of the most relevant tax and superannuation changes from the Federal Budget for 2021-22. Click the links below to read on and learn more about what they could mean for you.
