2. What is the Budget?
The budget is a document which outlines the government's funding policies and
demonstrates how the government will manage the economy for the benefit of the
Australian people.
3. How it Affects Investment Options
- Reduction of Company Tax rates by 2% - This allows companies to be more
profitable and it makes investing in the share market more attractive to investors,
companies can pay more dividends and their is greater profitability for both parties.
- Negative gearing - This issue was not touched by the liberal government in the
budget but the opposition's policy of restricting negative gearing to new homes has
caused a rush to buy existing properties and to negatively gear them, that has
caused an increase in the value of properties and investment of properties.
- Superannuation - The budget announced restricted individual contributions to
superannuation to $500,000 and people with assets over 1.6 million in their
superannuation fund will incur a 15% tax rate. This action should not change prices in
shares and real estate assets because superannuation is still the lowest tax
structure.
4. Who Benefits?
- People earning more than $80,000 receive a tax cut of $6 per week as the
middle income tax threshold is increased.
- Business big and small - The government will gradually increase the size of
businesses that can access the lower tax rate of 27.5 percent.
- Students - Schools get $1.2 billion in extra funding over three years from 2018.
5. Who Loses?
- Banks to sacrifice $121 million to fund corporate regulator ASIC under user pays
model.
- Multinational corporations will face a diverted profits tax or "Google tax" of 40 per
cent on income they attempt to shift offshore and will be policed by a 1000
member task force in the ATO.
- Universities will be hit with a 20 per cent funding cut, as part of fee deregulation
package.
