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> > LJ Hooker Research Review's the 2015/16 Federal Budget

LJ Hooker Research Review's the 2015/16 Federal Budget

Who wins and who loses in this Federal Budget?

Federal Revenue 2015/16

After a polarising first budget the federal government has delivered a more subdued second budget focusing on “Jobs, Growth and Opportunity”. While no single measure is expected to have a substantial effect on property markets, retuning growth to the economy, boosting business confidence and assisting with sentiment around job security should all provide stability for property markets across the country.

The final position of the budget for the current 2015/16 financial year is forecast to be a deficit of –$35.1 billion. The two major key budget measures are:

  • A $5.5 billion package to help small businesses grow;
  • A $4.4 billion childcare package for families.                                                 

In addition, there is new spending on infrastructure with a focus on northern Australia.

 

 

Infrastructure Spending

Infrastructure spending is the biggest driver to growth for property markets. It assists in opening up new areas for housing, helps increase supply and housing affordability and boosts local employment opportunities. Unfortunately for Sydney and Melbourne there was no additional spending for major new road or rail projects in the 2015/16 budget. However, the federal government remained committed to the funding of Badgery’s Creek airport and major road projects announced in last year’s budget.

 

 

Key infrastructure measures 2015/16

The biggest new infrastructure announcement was a $5 billion Northern Australia Infrastructure Facility. This will see the government partner with the private sector and governments of Western Australia, the Northern Territory and Queensland, to provide large concessional loans for the construction of ports, pipelines, electricity and water infrastructure.

Despite being scrapped by the Victorian government, the Commonwealth government remains committed to the construction of the East West Link and will provide $3.0 billion for any government willing to proceed with the project.

Due to a GST shortfall the federal government has provided $499.1 million for road infrastructure in Western Australia.

In Tasmania the government has allocated $60 million for irrigation schemes and a further $203 million to expand the Tasmanian Freight Equalisation Scheme to include exports.

A new $45 million Stronger Communities program has been introduced. This two-year package is for small local community capital projects with a value up to $150,000.

 

 

Small Business Package Will Help Boost Growth

Another positive feature of the 2015/16 budget is the new small business package. The key features of this package include:

Incorporated small businesses (turnover under $2 million) will see their company tax rate fall by 1.5 percentage points to 28.5 per cent.

Unincorporated small businesses will receive a 5 per cent tax discount capped at $1,000 per individual.

The government has also looked to boost small business spending by providing them with an immediate tax deduction for any individual assets they buy costing less than $20,000. This $20,000 limit applies to each individual item and can be applied to as many individual items as they wish.

In addition, start-ups will be allowed to immediately deduct professional expenses incurred when they start a business, such as legal expenses on establishing a company, trust or partnership.

These measures are a positive step in helping business owners invest in their businesses and increase their capacity to hire new staff.

 

Other Key Budget Measures

Childcare

  • An extra $3.5 billion over five years for childcare.
  • Two year, $246 million trial for nannies.
  • Stay-at-home parents with a family income of more than $65,000 will no longer secure childcare subsidies.

 

Pensions & Welfare

  • $10,000, over 12 months, incentive for businesses to hire Australians over the age of 50.
  • Pension assets test (excluding family home) cut to $820,000 for couples.

 

Tax

  • GST imposed on overseas digital downloads.
  • Fringe benefit tax for small businesses portable electronic devices abolished.

 

Foreign investment

  • Foreign investors will pay $5,000 for properties valued under $1 million and $10,000 for properties over $1 million. A fee increase of $10,000 will be charged with every additional $1 million in property value.

 

Source:

• Forecast budget deficit of –$35 billion for 2015/16.

• Small business tax rate reduced by 1.5% to 28.5%.

• Small business tax deduction for asset purchases costing less than $20,000.

• An extra $3.5 billion worth of spending on childcare.

• New $5 billion Northern Australia Infrastructure Facility established.