How Does the 2016 Budget Affect Me?

Another year, another budget… or another lengthy speech on primetime television accompanied by an oversized document full of words and numbers that appear to be in English and yet don’t make sense.

We have decoded this document for you, here are the parts that could affect you:

…if you are under 25 years and looking for full time work

Treasurer Morrison has thought of you – with $752 million invested into a new internship programme.  Already less than 48 hours since the Budget was released and this seems to be causing the most controversy.  Opponents are critical of young labour being used for free, with a token offering of $200 per fortnight (which works out as an hourly rate as low as $4 each hour worked).  But when the other option was an unpaid internship, an extra $200 in pocket is better than nothing.  We hope that businesses avoid the temptation to rort the system, especially in light of business tax cuts.

…if you’re a small/medium business owner

Happy days – corporate tax rate for small businesses has been decreased to 27.5% and the definition of small business has been widened to include those with turnover up to $10 million.

…if you earn over $80,000

A change in tax brackets means that an extra $7000 will be taxed at a lower rate, resulting in up to $315 extra from next your tax return.

…if you’re employed by the Public Service

Hang tight – budget cuts mean job cuts and the budget has slashed $1.4 billion in the next three years.

…unless you work for Defence

With $32.3 billion in the pipeline for defence - including acquisition of naval equipment (submarines, frigates and patrols), boost for innovation and ramping up the defence efforts in Iraq and Syria - defence jobs aren’t facing the volatility of the rest of the public service.

…if you smoke

Now is a good time to quit (or start saving!) – with planned increases of 12.5% each year for four years, that $25 packet will be around $40 by 2020.  If you have a packet a day habit, that’s an extra $105 every week (or $5460 a year!). 

…if you have a lot stored away in superannuation

And by a lot we mean $250,000 or more – your contributions will now be taxed twice as much with the tax rate increasing from 15% to 30%.

…if you have investment property

No change to negative gearing and capital gains tax means some peace of mind for you this year.

…if you’re looking to buy your first house

 You may have been hoping for a reduction in negative gearing benefits or increase in capital gains tax to help ease the inflating house prices.  Unfortunately no relief for you this year.

...if you’re concerned about the health system

The budget is somewhat bleak; yes public hospitals will receive extra funding, but the Medical Benefits Scheme will lose out and we may find an increase in out of pocket medical costs. 

$1.7 billion has been allocated to the Child and Adult Public Dental Scheme, having scrapped two programmes for low income and children’s dental services.

…if you like to shop online from international stores

You might see a hike in pricing, as they will have to register with the ATO and pay GST for goods sold.

…if you’re concerned and about education

Higher education deregulation has been postponed, but funding cuts continue.  Schools have access to extra funding, but not as high as anticipated last year and with more restriction on how to use the money (performance pay for teachers, adequate literacy and numeracy levels).

…if you’re concerned about the environment

Oops, it seems overall you’ve been a little neglected this year.  There is a provision for a meagre $171 million toward the Great Barrier Reef, but otherwise you’ll be disappointed by the lack of green initiative in the budget.

 

For more information, you can head to the Budget website at http://budget.gov.au/.

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