At 7:30pm tonight, Josh Frydenberg delivered his second budget announcing that “in 2020 Australians have been tested like never before… flood, fires, drought, and a global pandemic. So many Australians through no fault of their own are doing it tough. Lives have been lost, businesses have closed, jobs have gone. Our cherished way of life has been put on hold.”

The Treasurer said that tonight we embark on a journey to rebuild our economy and secure Australia’s future and that this budget is the Morrison Government’s economic plan to steer Australians through this crisis and build a better future.

The Government’s plan is to grow the economy, create jobs, and guarantee the essential services that Australians rely on, without increasing taxes.

Key Forecasts

• $213.7B deficit for 2020-21, $112B deficit for 2021-22, $87.9B deficit for 2022-23, and $66.9B deficit for 2023-24;
• $703.2B net debt for 2020-21, $812.1B net debt for 2021-22, $899.8B net debt for 2022-23, and $966.2B net debt for 2023-24;
• 1.5% GDP reduction is expected for 2020-21, 4.75% GDP growth is expected for 2021-22, 2.75% GDP growth is expected for 2022-23, and 3% GDP growth is expected for 2023-24;
• 7.25% unemployment is expected for 2020-21, 6.5% for 2021-22, 6% for 2022-23, and 5.5% for 2023-24.

Key Changes for Business

The Treasurer announced the following tax and economic benefits for business in this budget:

• From budget night until 30 June 2022, all businesses with annual turnovers up to $5 billion will be able to deduct the full cost of eligible depreciating assets of any value in the year they are first used or installed ready for use;
• From budget night until 30 June 2022, the cost of improvements made to existing eligible depreciable assets can also be fully deducted;
• Companies with annual turnover up to $5 billion can access a new temporary loss carry-back measure. These companies can offset losses incurred in FY2020, FY2021, and FY2022 against profits made in FY2019. Companies can claim these tax refunds when lodging their FY2021 and FY2022 tax returns;
• From 1 July 2021, companies with annual turnover less than $20 million, that are eligible to claim the research & development tax offset, will receive an increased refundable R&D tax offset equal to the company tax rate plus 18.5% and there will be no $4 million cap on annual cash refunds. Also, the annual expenditure threshold to which this offset applies will increase from $100 million to $150 million;
• The Government is expanding access to a range of small business tax concessions and these concessions will be available to businesses with annual turnovers of less than $50 million. Some of the concessions that will become available to these higher turnover businesses are as follows:
  • From 1 July 2020:
    • immediate deductions for eligible business start-up expenses;
    • immediate deductions for prepayments of eligible business expenditure.
  • From 1 April 2021:
    • exemption from Fringe Benefits Tax on car parking provided to employees;
    • exemption from Fringe Benefits Tax on multiple work-related portable electronic devices (e.g. phones or laptops) provided to employees.
  • From 1 July 2021:
    • simplified trading stock rules;
    • a 2 year amendment period for income tax assessments for income year starting from 1 July 2021.
• From 7 October 2020, the Government is introducing a new “Jobmaker Hiring Credit” which will operate as follows:
  • All businesses other than the major banks can access this credit;
  • Employers can claim $200 per week for each additional eligible employee they hire aged 16 to 29 years old;
  • Employers can claim $100 per week for each additional eligible employee they hire aged 30 to 35 years old;
  • The credit is available for new jobs created until 6 October 2021 and is payable for up to 12 months from the date the new position is created;
  • New hires must work for at least 20 hours per week;
  • To be eligible, the employee must have received the JobSeeker Payment, Youth Allowance (Other), or Parenting Payment for at least one of the previous three months at the time of hiring.

Key Tax Changes for Individuals

The Treasurer announced the following income tax changes for individuals:

• From 1 July 2020, the top threshold of the 19% tax bracket will increase from $37k to $45k;
• From 1 July 2020, the top threshold of the 32.5% tax bracket will increase from $90k to $120k;
• From 1 July 2020, the low income tax offset will increase from $445 to $700;
• The low and middle income tax offset of $1,080 will remain for the year ending 30 June 2021.