Wednesday, October 07, 2020

Frydenberg slashes tax revenue

Treasurer Josh Frydenberg on Tuesday night unveiled a federal budget loaded with $50 billion in fast-tracked tax cuts weighted towards high-income earners, but no permanent increase in JobSeeker support. The Treasurer hopes that the Australian Tax Office can apply the new tax rates by the middle of this month. There is no extension of JobSeeker supplements due to expire in December, but a one-year $4 billion JobMaker Hiring Credit will be paid to businesses that hire young unemployed workers for at least 20 hours a week. The rate is $200 a week for people under 30 and $100 a week for people between 30 and 35. Shadow Treasurer Jim Chalmers expressed concerns about the age limit on the new wage subsidy. Labor is set to support the personal income tax cuts, but Chalmers wants time to consider expanded tax write-offs for businesses. 

There are a host of benefits for business in the budget, such as companies with a turnover of less than $5 billion able to deduct the full cost of capital assets purchased after budget night, while small and medium businesses will also be able to apply “full expensing” to second-hand assets, and businesses earning $50 million to $500 million will be able to do so for assets of less than $150,000. Companies with turnover up to $5 billion will be able to offset losses against previous profits, and businesses exempting from the 47 per cent fringe benefits tax for employer-provided retraining activities to employees who are redeployed to a different role. The budget also offers cash payments worth $500 for seniors, carers and disability support recipients, costing $2.6 billion, and 23,000 in-home aged care packages will be offered, costing $1.6 billion. Notable omissions include no new announcements for climate initiatives or childcare support. The deficit is forecast to surpass $213 billion, with net debt forecast to peak at $966 billion in 2024.

The federal budget also puts forward $1 billion for Australia’s university research sector. There’s funding for 50,000 online short courses to upskill workers in teaching, health, science, information technology and agriculture. It comes as an overhaul of university funding that will more than double fees for humanities courses, secured the support of minor party Centre Alliance on Tuesday, ensuring the federal government has the numbers to pass the bill.

In international news, Facebook on Tuesday removed a post from US President Donald Trump in which he falsely claimed that Covid-19 is less deadly than the seasonal flu. Facebook spokesperson Andy Stone confirmed the company removed the post for breaking its rules on Covid-19 misinformation. Trump also posted the same message on Twitter, which has been left online but with a warning attached by Twitter noting it violated the company’s rule on spreading misleading information related to Covid-19. 

Budget 2020: Getting on with the jobs
Josh Frydenberg’s second budget is a world away from the surplus he was predicting last year. Now, in the middle of a pandemic, debt is on track to hit $1 trillion and the Treasurer is talking up a jobs-led recovery. Today, Karen Middleton on a budget of big numbers and heroic assumptions.

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Max Opray is Schwartz Media’s morning editor and a freelance writer.