Federal budget 2019/20 and impact on property
Delivered in the shadow of an election, the 2019/20 federal budget was always going offer more sweeteners than tough decisions. This year’s budget headlines ‘a return to surplus’, while major personal tax cuts and large infrastructure projects make up the policy position of the government moving forward. However, given the new measures outlined will not be debated or legislated before the federal election campaign next month, the biggest question is how relevant is this budget to Australians? Property market effects There was no announcements, changes or incentives that will directly affect homeowners, real estate investors or the property industry in general. That said, personal and small business tax cuts will assist with the cost of living pressures, consumer spending and businesses to invest. Indirectly, major road and rail infrastructure projects, hospital upgrades and drought assistance funding will provide significant uplift to regional towns and communities. This will help support businesses and jobs in these areas which will in-turn strengthen local economies. The bottom line – back in surplus (next year) After more than a decade, the federal budget is forecast to finally returned to surplus in the coming financial year. A budget surplus of $7.1 billion is expected for 2019/20 rising to surpluses of $11 billion and $17.8 billion in 2020/21 and 2021/22 respectively. The economic indicators contained in the budget provide a positive snapshot of the Australian economy with the unemployment rate expected to remain at 5% and GDP growth of 2.75% over the next two financial year. Personal tax cuts brought forward Similar to last year, the centerpiece of this year’s budget is a restructuring of the personal income tax thresholds, although this will not occur until 2024/25. That said, an immediate lifting of the low-to-middle income tax offset (LMITO) will help households this year, providing a tax reduction in 2018/19 FY of up to $1,080 for singles and $2,160 for dual income families. Small businesses have a double win A budget measure which will take effect immediately is an increase in the small business instant asset write-off threshold, which will be lifted to $30,000 and expanded to include businesses with a turnover of $50 million. In addition, businesses with a turnover of less than $50 million will have their tax rate lowered to 25% by 2021/22. Infrastructure New infrastructure helps reduce commute times, increases productivity, boosts local employment opportunities and makes outer-ring suburbs more accessible and attractive. Positively, spending on infrastructure will total $100 billion over ten years with the 2019/20 Federal Budget focusing on a number of fast rail projects, road safety projects and highway upgrades with the biggest beneficiary being regional Australia. Fast rail Major road Major projects by State QLD NSW VIC WA SA ACT NT