2011 Federal Budget

At 7:30pm tonight, Wayne Swan delivered his 4th budget with a forecast budget deficit of $22.6 Billion for 2011-12. The main objectives of this budget are to bring the opportunities that flow from a strong economy within reach of all Australians, and to build a more productive workforce. The budget is forecast to return to a $3.5 Billion surplus in 2012-13.

Key Forecasts

•   2.25% GDP growth is expected for 2010/2011
•   4% GDP growth is forecast for 2011/2012
•   3.75% GDP growth is forecast for 2012/2013
•   5% unemployment is expected for 2010/2011
•   4.75% unemployment is forecast for 2011/2012
•   4.5% unemployment is forecast for 2012/2013

Income Tax Rates

For the first time in 9 years, there has been no change to income tax rates. Individual rates remain as follows: 

Tax rate (%)	Income level
0	0 - 6,000
15	6,001 - 37,000
30	37,001 - 80,000
37	80,001 - 180,000
45	180,001+

Key Changes for Individuals and Families

• The dependant spouse tax offset, for couples without children, will be phased out for dependant partners aged under 40 from 1 July.
• $300 of the low income earners tax offset will be paid to low income earners during the year via reduced PAYG withholding from their salaries.
• The effective tax rates of 50,000 single parents will be cut by up to 20%.
• The education tax refund will be extended to cover school uniforms.
• The Family Tax Benefit Part A will be increased by up to $4,208 per year for families with 16 - 19 year old children.
• The upper income limit of the Family Tax Benefit Part A will be frozen for an additional 2 years, therefore, limiting higher income earners' access to this benefit. The eligibility for this benefit will be limited to children up to the age of 21 (previously 24).

Key Changes for Businesses

• Access to the low income earners tax offset will be removed for unearned income of minors. This will include dividends and trust distributions and will mean that family trusts will only be able to distribute $416 per year tax free to minors rather than the current $3,333. Many businesses and investors currently benefit from this.
• The small business entrepreneur's tax offset will be scrapped.
• Small businesses will be able to write off the first $5,000 of the cost of a new vehicle.
• The company income tax rate cut, annouced in the 2010 budget, will be brought forward for small businesses.
• The car fringe benefit tax statutory formula will be changed to a single flat rate of 20%. This will benefit businesses with vehicles that travel less than 15,000km per year and disadvantage businesses with vehicles that travel more than 25,000km per year.

At 7:30pm tonight, Wayne Swan delivered his 3rd budget with a forecast budget deficit of $40.8 Billion for 2010-11.

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2010 Federal Budget

At 7:30pm tonight, Wayne Swan delivered his 3rd budget with a forecast budget deficit of $40.8 Billion for 2010-11. The objective of this budget is to emphasise responsible management. The budget is forecast to return to a $1 Billion surplus in 2012-13, making Australia the best performing advanced economy in the world. In addition to this, unemployment is expected to reduce to 4.75% in 2011-12, and GDP is expected to grow to 4% in 2011-12.
 
Most of the tax related items in the budget confirm changes that were previously announced, however, the government did announce some tax benefits in the form of reduced tax on interest income and a standard work related expense deduction for individuals resulting in simplified tax returns.
 

Individual Income Tax Rates

Previously announced changes to individual income tax rates have been confirmed as follows: 

From 1 July 2010 the low income earner tax offset will increase to $1,500 so individuals who earn less than $30,000 per year will have a tax free threshold of $16,000.

Savings Discount

Simplified Tax Returns

Business Tax Benefits

As previously announced in the government's response to the Henry tax review, the budget confirms the following:

• The company tax rate will be reduced to 29% in 2013-14 and to 28% in 2014-15. The reduction to 28% will be accelerated for small businesses to 2012-13.
• Small businesses will be entitled to claim an immediate deduction for assets costing less than $5,000. The current threshold is $1,000.
• The superannuation guarantee will increase from 9% to 12% from 1 July 2013 until 2019-20. 

Superannuation

As previously announced in the government's response to the Henry tax review, the budget confirms the following superannuation changes:

• The government will pay up to $500 into superannuation annually for people earning under $37,000 per year.
• The concessional contributions cap for people aged over 50, with less than $500,000 in superannuation, will be increased from $25,000 to $50,000 from 2012, as it is currently set to reduce from $50,000 to $25,000 from 2012.