The Abbott government’s federal budget plans for 2015 are quickly making the rounds for good and bad reasons. The goal is to boost the economy, and like any other government plans, there will be winners and losers.
The whole plan is banking on a flourishing economy, which the government aims to strengthen by stimulating the small business sector and increasing the strength of Australia’s workforce. But these efforts require certain sacrifices that might earn the ire of citizens. A delicate balancing act the federal government will have to embark on.
The following are the highlights of the 2015 Federal Budget:
Since the overall goal is to stimulate the economy, the 2015 Federal Budget will focus the bulk of its funding towards small businesses, rural economy assistance, and improved child care support. The latter’s improvement focuses on encouragement of participation of parents in Australia’s workforce.
- Substantial small business tax cuts
Small businesses are the huge winners of the 2015 Federal Budget. Apparently, the government are eyeing a huge investment boost for small businesses which could massage the economy through increased rates of unemployment.
Small companies are set to enjoy a 1.5% tax discount, which could improve their financial standing thanks to the extra cash gained from the tax discount. Unincorporated small businesses get to enjoy higher rates of tax discount of 5 percent, further improving the potential of better employment landscape for the citizens of Australia.
Following through from the tax discounts, the federal government is also allowing small business of Australia to claim tax deductions of business purchases up to $20,000.
To underscore the efforts of boosting the small business economy, the government also eyes eliminating a number of regulations that hampered the growth of small businesses of the past and adopting an assertive stance that aims to encourage entrepreneurship.
- Improved child care support
Parents will get to have a breather as the 2015 Federal Budget will deliver a reform package worth $3.5 billion for affordable and accessible child care, an act that attracts stronger workforce participation.
Not letting up, the federal government plan will invest $843 million for preschoolers, ensuring a strong education head start for the future citizens of Australia, increasing the potential of a better future. Even children from disadvantaged families will benefit from this plan for they will be covered by the government under the Child Care Safety Net.
- Improved government assistance for farmers
Farmers will also greatly benefit from the 2015 Federal Budget. Cattle farmers, for example, will be seeing a $101.3 million in funding for four years for road infrastructure improvement geared toward cattle supply chains.
Farmers hit by the drought will receive a $250 million lifeline to extend the Drought Concessional Loan Scheme by a year. Not only this, the government plan will allow farmers tax write-offs for fences and new water storage claims, greatly boosting their agricultural efforts thanks to the additional capital. Farmers in areas heavily affected by the drought can now access the $25 million of pest-control support made available by the government.
With the great funding assistance provided by the 2015 Federal Budget, you might wonder where these funds will come from. This is where the bad side of the 2015 Federal Budget comes in, where it shows how the government tries to pressure stay at home parents by cutting childcare rebate access, extending the goods and services tax on intangible goods such as digital products and services, and the inevitable unemployment of government workers due to heavy budget cuts.
- Stay at home parent’s childcare penalties
To further improve Australia’s workforce, the government is aiming to encourage parents to join the workforce by cutting childcare rebate access to stay-at-home parents. From a certain perspective, this might be seen as an underhanded federal government tactic which forces parents to do their part in the Australian workforce.
The federal government plan hits its goal further by rendering families whose annual income is above $65,000 dollars ineligible for certain types of childcare assistance. This move will most likely hurt the middle-income sector.
- The introduction of the Netflix Tax
This area of the 2015 Federal Budget received the most attention since it’s striking at what once deemed to be an untouched area of government taxation: the internet.
The government is eyeing a $350 million income for the first two years by implementing a 10% tax on digital products and services. This tax provision includes streaming services, which earned the nickname, “Netflix Tax”.
The federal government will achieve this tax provision by extending the area covered by the Goods and Services Tax towards intangible goods, a category which internet services and products fall under. By imposing a tax on this area, the government can easily achieve its goal of acquiring $350 million dollars.
- The looming unemployment of government workers
Due to the significant budget cuts in government sectors, a huge number of federal government employees are facing the loss of employment.
The government workers from the Health portfolio, Education portfolio, and Immigration and border protection are deemed to be the ones getting the brunt of the effects of the government budget cuts.
It can be inferred that these potential employment losses can be offset by the government’s substantial funding for the small business sector.
It’s entirely up to the people whether the good side of the Federal Budget for 2015 outweighs the bad side or the bad side is significant enough to drown out the benefits of the good side. However, one thing’s for sure: this will greatly affect the economic outcome of Australia and its citizens subsequently.
If it turns out that the 2015 Federal Budget is in your favor, it makes a lot of sense to position yourself to make the most out of the benefits. As an employee or even as a small business owner, it helps a lot to maximize every little edge that would boost your financial standing.
However, if the 2015 Federal Budget turns out to be unfavorable to you, you should be prepared for possible repercussions before it hits you. Better to be ready in order to avoid problems than to get caught in this economy-changing government move.
Contact Darcy Bookkeeping and let us help you whatever your situation would be in the midst of Australia’s 2015 Federal Budget. Darcy Bookkeeping will always be on top of things ready to help you in any way they can with its top-notch service and experienced team.