What you need to know about the 2020-21 Federal Budget
Last week, as part of the 2020-21 Federal Budget, the Government proposed changes to super that should help members improve their retirement outcomes. We’ve summarised these and some other key budget updates that could benefit you, such as income tax cuts and support for economic growth and jobs.
Changes to super
Your super will follow you
To prevent the creation of multiple super accounts, which can lead to paying additional fees and insurance premiums, the Government has proposed a change to help people keep their super fund when changing jobs.
When you change jobs, employers will need to pay your super into your existing fund if you have one unless you choose another fund.
YourSuper comparison tool
You’ll be able to compare different funds fees and performance using YourSuper, a new online tool from the Australian Taxation Office (ATO). This will make it easier for you to choose a super fund that suits your needs.
Measuring fund performance
You’ll be able to see if a fund is underperforming with an annual performance test on MySuper products, and a fund will need to let members know if it is underperforming.
Income tax cuts
The Government is planning to bring forward the income tax cuts scheduled for 1 July 2022. This means 11.6 million Aussies will have more money in their pockets from as early as this year. These cuts are to be backdated to 1 July 2020.
Some of these proposals include:
- increasing the upper threshold of the 19% tax bracket from $37,000 to $45,000
- increasing the upper threshold of the 32.5% tax bracket from $90,000 to $120,000
- keeping the Low- and Middle-Income Tax Offset (LMITO) for 2020-21, after which it will end
- increasing the Low-Income Tax Offset (LITO) from $445 to $700.
What does this mean for you?
If you’re earning up to $37,000, you’ll be $510 better off;
If you’re earning between $37,001 and $48,000, you’ll be between $510 and $2160 better off;
If you’re earning between $48,001 and $90,000, you’ll be between $2160 and $2295 better off;
And if you’re earning between $90,001 and $126,000, you’ll be between $2295 and $2745 better off
Additional support to Australians through the pandemic
If you’re considering building a new home or rebuilding an existing house in 2020 the Government’s HomeBuilder program might help you. HomeBuilder provides eligible owner-occupiers, including first home buyers, with a tax-free grant of $25,000 to build a new home or to rebuild.
The Government is also enabling the National Housing Finance and Investment Corporation (NHFIC) to provide a further $1 billion of finance, taking its Commonwealth guarantee up to $3 billion. NHFIC will provide more low-cost finance to eligible applicants, including community housing providers, so they can build more affordable housing.
Young job seekers
The Government’s new $4billion JobMaker hiring credit will be great for employers looking to hire. They’ll be incentivised for taking on new employees aged 16—35. Around 450,000 positions for young Australians will be supported through this initiative.
The Government is also investing $252 million over two years to support the delivery of 50,000 higher education short courses in areas including teaching, health, information technology, science and agriculture.
The Government’s $1.5 billion Modern Manufacturing Strategy will deliver high-value jobs, improve our competitiveness, and ensure we have access to the essential products needed to keep us secure and resilient. It prioritises industries that match our areas of strength or strategic interest, where Australia can compete with the rest of the world. This includes building our capability in defence, space, food and beverages, recycling and clean energy, medical products, resources technology and critical minerals processing industries.
The Government will invest $50 million in the Women@Work Program to help restore and exceed women’s workforce participation to pre-COVID-19 levels.
Women@Work expands the existing Women’s Leadership and Development Program to create jobs and employment opportunities for women, including women from diverse backgrounds. Key components of the program will be delivered in partnership with organisations that operate proven, high-affected projects to support women’s economic security. Master Builders Australia’s Women Building Australia program will be expanded to support more women into the male-dominated building and construction industry.
The Government is also investing in Respect@Work to address and prevent workplace sexual harassment in Australia. This measure will provide funding for new tools and training to support workers and employers to create safe workplaces for everyone.
An additional $35.9 million is lined up to expand the Boosting Female Founders initiative to provide women entrepreneurs access to expert mentoring and business advice.
The Government announced an extra $14 billion in new and fast-tracked infrastructure projects over the next four years.
These projects will support a further 40,000 jobs during their construction and are part of the Government’s record 10-year transport infrastructure investment pipeline which has been expanded to $110 billion.
Fast-tracking ‘shovel ready’ projects
Over the next two years, the Government will inject significant additional stimulus to create jobs by working with state and local governments to ensure an additional $3 billion in shovel-ready projects are rolled out as soon as possible, supporting over 10,000 jobs across Australia.
This includes $2 billion to deliver small scale road safety projects and an additional $1 billion for the Local Roads and Community Infrastructure Program. These programs will continue to drive a community-led recovery from COVID-19.
For more information about the 2020-21 Budget, visit budget.gov.au.
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