http://www.skynews.com.au/news/top-stories/2016/05/04/company-tax-cut–super-changes-lead-budget.html
Treasurer Scott Morrison insists his budget isn’t about winners and losers, but setting out a plan to grow the economy and boost jobs over the next decade.
Labor says despite spinning the mantra of fixing the budget to win the 2013 election, the government is now in a worse position with a deficit of almost $40 billion this financial year.
Mr Morrison’s first budget – which came just days before Malcolm Turnbull is set to seek a July 2 election – contained tax cuts for the wealthy and businesses, but a clawback of tax breaks on high-end retirement nest eggs.
‘The Liberals say this is a plan for jobs and growth – but it’s really a plan to deliver tax cuts for multinationals at the expense of Australian families,’ shadow treasurer Chris Bowen said.
Central to the government’s plans, ahead of a July 2 election, is a 10-year plan to gradually trim company tax, at a cost to the budget of $5.3 billion over the next four years.
The budget papers show over the long term, lower company tax is expected to add one per cent to GDP.
The small business tax rate, which was lowered in Joe Hockey’s 2015 budget, will go down a further point to 27.5 per cent with the turnover threshold increased from $2 million to $10 million.
From July 1, the upper limit for the middle-income tax bracket will rise from $80,000 to $87,000 a year – stopping around half a million workers from tumbling into the second-top marginal rate of 37 per cent.
Mr Morrison said a decision from the Reserve Bank to cut the cash rate to a new historic low of 1.75 per cent worked hand-in-glove with the government’s plan to reduce the company tax rate to 25 per cent over the next decade, adding an estimated $16 billion a year to the economy over the long term.
Treasurer Scott Morrison will also introduce a $1.6 million cap on the total amount of superannuation an individual can transfer into retirement-phase accounts.
People with combined incomes and superannuation contributions greater than $250,000 will pay 30 per cent on their concessional contributions, up from the current 15 per cent.
Also, the concessional contributions cap will be lowered to $25,000 a year.
And a new lifetime cap of $500,000 will be introduced for non-concessional contributions – to stem the use of super for tax minimisation and estate planning.
Mr Morrison said the superannuation system needed to be better targeted to support people to save and not be dependent on the age pension.
Labor immediately seized on it as putting big business ahead of families and doing little to restore funding for schools and hospitals.
‘This is a budget that develops a very dangerous trifecta – underfunds schools and hospitals but also sees the budget deficit blow out yet again,’ Shadow Treasurer Chris Bowen says.
A person earning $1 million a year will get a $16,715 tax cut, but three-quarters of taxpayers would get nothing, Mr Bowen said.
A couple on a single income of $65,000 with three children in primary school would be $3034 worse off a year.
A single mother on an income of $87,000 with two children in high school would be $4463 worse off.
Mr Morrison is also banking on a program offering training, internships and wage subsidies for business to boost youth employment.
The budget includes $840 million for a new youth employment package that links businesses with 120,000 young people on the dole who are eligible for a government internship program.
But first jobless youth must undertake six weeks of job-readiness training, including classes on presentation and how to work in a team.
A four- to 12-week internship could follow at a business such as a newsagent or supermarket.
Middle-income earners will get a tax break of up to $315 a year, while the highest earners won’t pay the two per cent deficit levy from 2017.
The budget also revealed vastly boosted firepower against multinational tax avoidance with the government looking to ramp up revenues to fund tax cut promises.
Canberra hopes to raise up to $4.35 billion over the next four years through measures that include a new taskforce led by the ATO, steep penalties for tax dodgers and tighter rules to close loopholes that multinational companies have been exploiting.
The announcements will also come in handy politically, as tax avoidance turns into a hot button topic ahead of the federal election.
The government will also beef up its Multinational Tax Avoidance Law, which came into effect on January 1, with a new diverted profits tax to impose a 40 per cent penalty tax rate on multinationals attempting to shift their Australian profits offshore.
The new tax is based on Britain’s ‘Google tax’ which targets multinationals that avoid paying tax by shifting profits to lower taxing countries.
In Australia, corporate giants including BHP Billiton, Rio Tinto, Apple and Google have been identified as using so-called marketing hubs in Singapore to help reduce their tax bill in the country.
Higher taxes will lift the price of a packet of cigarettes to $40 within four years.
The plan to whack four annual increases of 12.5 per cent on the tobacco excise from September next year will help lift the states’ entitlements by more than $700 million over those years.
The other change supporting GST proceeds is the application of the consumption tax to all goods bought online from overseas from 2017.
Overall, the states and territories are looking at a total GST pool of $60.7 billion in the coming year, with NSW again getting the lion’s share – $17.6 billion – and ACT the least at $1.2 billion.