There were a few new changes in the budget that Treasurer Josh Frydenberg announced yesterday.
The Coalition will only be able to implement many of the items raised if they are still in government after the next election, which is expected to be in May. Labor may decide to
Here are some of the highlights from the budget:
Budget to return to surplus..probably
The strength of the resources sector with businesses like Rio Tinto Limited
(ASX: RIO) & BHP Group Ltd
(ASX: BHP) and the high employment rate has led to a budget surplus being very close.
Next year Treasurer Frydenberg has forecast to a surplus of $7.1 billion, even after a large giveaway. It hasn’t been since the GFC that Australia has seen a surplus and many other Western countries are a huge distance away from a surplus, such as the US which has seen its deficit widen under President Trump.
Higher tax offset and lower taxes for the middle class
The the low to middle income tax offset (LMITO) has been doubled for people earning between $48,000 to $90,000 to $1,080 per person.
The government now plans for the 19% tax rate to be extended up to $45,000 (instead of $37,000) and a 30% tax rate for people earning between $45,000 and $200,000 by FY25. This reduces the 32.5% tax rate and eliminates the 37% tax rate.
Small business boost
Small businesses will now be able to fully depreciate assets costing up to $30,000. The definition of small business has also been expanded to include businesses with revenue up to $50 million.
The tax rate for companies with revenue of less than $50 million will be reduced to 25% by FY22.
Infrastructure
The government has allocated $100 billion for infrastructure expenditure over the next decade, with Victoria and Queensland getting the larger of the allocations. These are important states for either political party to win in the next election. Although you could say they both need a bit of catch up of infrastructure spending.
Tax focus on big companies
The ATO is being given another $1 billion to focus on big international businesses that are not paying their taxes properly. This is expected to raise $4.6 billion in tax – that’s a good return! If only it would scale like that to $10 billion or more.
However, no matter what the government does, the best businesses on the ASX will keep growing profits regardless of policies. That’s why the proven ASX shares in the free report below are so attractive.
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