Budget 2021: What’s new and how will it impact you?
The 2021 Federal Budget has been handed down, with Federal Treasurer Josh Frydenberg announcing billions of dollars worth of spending designed to support the country in returning to economic prosperity.
There are a number of announcements, incentives and programs revealed that are designed to help drive the economy forward.
With Australia's unemployment rate forecast to drop to 4.5% in 2023-24 and 2024-25, job creation is high on the government's agenda, confirmed Frydenberg.
"We have a historic opportunity to take unemployment from 5.6% today to where it started at the beginning of this [COVID-19] crisis, and even lower," Frydenberg said during the Budget announcement.
Some of the key announcements from the 2021 Budget announced 11 May include:
- $17.7 billion for the aged care sector and 80,000 new homecare packages funded
- $15 billion on infrastructure projects
- $13.2 billion over four years for the NDIS
- $9.5 billion over four years to increase JobSeeker by $50 a fortnight
- $2.3 billion towards mental health and suicide prevention
- $1.9 billion into strengthening our national security, law enforcement and intelligence agencies
- $1.7 billion extra for childcare sector jobs over the next three years
- $680 million on domestic violence programs
- $500 million towards JobTrainer programs, alongside a vow to create tens of thousands of new apprenticeships and traineeships
Here are some of the major announcements and how they impact you
Tax cuts for individuals
To support household income and create more jobs, the government will also deliver an additional $7.8 billion in tax cuts, by retaining the low and middle income tax offset (LMITO) in 2021-22. It is worth up to $1,080 for singles earning under $126,000, and $2,160 for couples on low and middle incomes.
What this means to you? Up to $1,080 extra in your pocket each year, instead of being paid in tax.
Read more about how much tax you stand to save
Tax breaks for small businesses
Small business operators stand to benefit from the 2021 budget, which will deliver a huge extension of tax breaks to those who wish to buy new machinery, equipment or vehicles. Those businesses with a total income of less than $5 billion are allowed to deduct the full cost of eligible depreciable assets of any value, if acquired before 6 October, 2020 and first used or installed ready for use by 30 June, 2023.
What this means to you? For SMEs, the extension of the JobMaker scheme is potentially worth a small fortune, and will deliver $20 billion in tax relief over the next four years.
More superannuation
The super rate your employer is required to pay you is about to increase. It will increase from the current 9.5% p.a. to 10% p.a. as of 1 July 2021. The super guarantee rate will continue to gradually increase until it reaches 12% p.a. by July 2025.
What this means to you? More superannuation paid by your employee into your superannuation fund.
Read more about changes to superannuation
First home buyer programs
A massive 10,000 more places have been announced for the First Home Loan Deposit Scheme, for the construction of newly built homes only – these new placements will not be available for the purchase of established homes. At the same time, the withdrawal limit for the First Home Super Saver Scheme has increased from $30,000 to $50,000, though time frames remain unclear.
What this means to you? Greater opportunities to access the FHLDS and the FHSSS, both of which can help first homebuyers into the property market sooner.
Family Home Guarantee
Up to 10,000 single parents (2,500 per year for four years) will be eligible to buy a home with a deposit of just 2%, under the government's Family Home Guarantee. This means for the purchase of a property worth $700,000, the homebuyer will need to save a deposit of just $14,000.
What this means to you? The potential to buy a property with just a 2% deposit saved.
Read more about the Family Home Guarantee
Extra childcare subsidies
The government has announced plans to add $1.7 billion to the $10.3 billion already budgeted for childcare each year. The main focus is families with two or more children under five, but it also benefits couples with a combined income above $189,390, as it removes the current childcare subsidy cap. The policy offers rebates of up to 95% if you have two kids in daycare, however, the policy isn't due to start until July 2022.
What this means to you? "250,000 families will be better off by an average of $2,200 each year," Frydenberg told Parliament on Tuesday night in his budget speech.
Additional funds for job seekers
While $9.5 billion has been committed over four years to increase JobSeeker by $25 a week or $50 a fortnight (commencing 1 April), the government says it is "strengthening mutual obligations [by providing] better support for job seekers in their search for work". Translation: job search requirements for those on the JobSeeker payment will increase from 15 per month now, to 20 per month from July 2021.
What this means to you? $25 extra per week for anyone receiving the JobSeeker payment.
Travel restrictions
International borders are largely due to stay shut until mid-2022, other than New Zealand, which is already open.
Despite predictions that Australia is on track to fully vaccinate the population by the end of the year, the budget papers make it clear that borders will remain largely closed until mid 2022.
"Inbound and outbound international travel is expected to remain low through to mid-2022," the budget papers read, "after which gradual recovery in international tourism is assumed to occur."
What this means to you? Travel plans will remain anchored to domestic destinations for the rest of 2021.
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