Budget 2016: Winners and losers

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In his first budget, Federal Treasurer Scott Morrison delivered few surprises, focusing on superannuation changes that will affect only the wealthiest of Australians.

Tax cuts to small and medium businesses, and a modest income tax break for half a million middle-income Australians have been offered in a bid to bolster the coalition's election hopes.

So, who wins and who loses?

Budget winners

The main winners in the 2016 budget were small to medium-sized companies, middle-income earners, businesses (in time), young job seekers and the tax office.

Small to medium-sized companies

The federal budget is offering up a company-tax rate cut for 870,000 companies with annual turnover less than $10 million.

An additional 90,000 small businesses can access tax concessions among other measures.

People earning more than $80,000

Those earning more than $80,000 will get a modest tax cut with the government increasing the second-highest tax bracket from $80,000 to $87,000.

Approximately 500,000 middle-income earners will be impacted by the changes from 1 July, 2016.

These measures mean they’ll pay 32 cents tax on the dollar for longer, instead of 37 cents.

The move is designed to prevent ‘bracket creep'. Mr Morrison said those earning "average wages" should stay in the middle income tax bracket.

Watch: Scott Morrison's Budget 2016 speech

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Businesses

The federal government says it will reduce the company tax rate to 25 per cent over 10 years, meaning all businesses will benefit in time.

The government plans to extend the lower tax rate of 27.5 per cent to all businesses by stepping up the threshold each year until 2023-24.

The treasurer said it’s a measure designed to secure the country’s future prosperity.

Young job seekers

Young people looking for work will supposedly be given a boost with $752 million poured into the Youth Jobs PaTH – Prepare, Trial, Hire program to begin from 1 April 2017.

The program involves internships and placements, though young job seekers will only receive $200 per fortnight on top of their regular income support payment.

Australian Tax office

The ATO is receiving millions of dollars to set up a tax avoidance task force to go after multinationals, corporate and wealthy individuals.

More than 1000 specialist staff will be involved, they’ll also be allowed special access to information from ASIC to assist with their enquiries.

Defence:

Defence was a big winner this year, it’s own budget will grow to 2 per cent of GDP by 2020-21 (three years earlier than originally planned).

The naval shipbuilding strategy, which will see the construction of new submarines and patrol boats in South Australia and Western Australia was already announced as part of the defence white paper.

Meanwhile, a significant $353 million budget boost has been given to Australia’s contribution to the international effort to degrade IS. This operation is also known as Operation Okra.

Budget Losers

The biggest budget losers in 2016 are people earning less than $80,000, multinational tax dodgers, smokers, some Indigenous programs, online shoppers and potentially, university students.

Multinationals

Following in the footsteps of the UK, a new diverted profits tax will be introduced to tax multinationals on income they’ve sought to shift offshore.

They’ll be penalised at a rate of 40 per cent.

The tax will apply to income years commencing on or after July 1, 2017 for large global companies turning over $1 billion or more.

The government hopes it will get back $200 million in lost tax revenue over the forward estimates.

Smokers

The hip-pockets of more than 2.5 million Australian smokers will be hit, with four annual increases of 12.5 per cent per year from 2017.

This measure means smokers could pay 50 per cent more for a pack of cigarettes by 2021 (nearly $40).

The government’s also reducing the amount of duty free cigarettes you can purchase, down from 50 to 24, from 1 July.

An amount of $7.7 million will be spent over two years to expand the Department of Immigration and Border Protection’s Tobacco Strike Team.

University students

The government has now taken a measure that would allow universities to set their own fees (full fee deregulation) off the table.

But, universities will still be hit with a 20 per cent funding cut, which was originally proposed as part of a fee deregulation package.

The federal government is also looking into partial deregulation, which could lead to universities offering courses where fees are set by demand.

Online shoppers

The federal government will apply GST to ‘low-value’ goods imported from overseas from companies with a turnover of more than $75,000 in Australia.

This would impact on purchases from companies like ASOS and Amazon. 

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