Article published 08 June 2021
Let’s take a look at how the latest Budget could impact you, your property plans and your small business.
The 2021/22 Federal Budget saw the Morrison Government launch a fresh round of stimulus. It will take net government debt to $617.5 billion this year, peaking at $980.6 billion in June 2025.1
However, Federal Treasurer Josh Frydenberg,2 says, “This is low by international standards. As a share of the economy, net debt is around half of that in the UK and US, and less than a third of that in Japan.”
The economy bounces back
Even before the latest Federal Budget, the economy’s rapid recovery defied the naysayers.
The unemployment rate fell to 5.5% between March and April 2021. That’s the sixth consecutive fall, down from 6.9% in October 2020, and 2.0% below its peak in July 2020, when unemployment was at 7.4%.
Interest rates are still at historic lows, and the Reserve Bank has reaffirmed that it doesn’t expect to raise rates for at least three more years.
The upshot is that Australia’s economy is expected to grow 4.25% in the current financial year.3 Not bad when you consider that this time a year ago the Treasurer4 feared unemployment could reach 15% and the economy could contract by more than 20%.
The question is, what does the latest Federal Budget hold for you? Let’s find out.
Personal tax relief
Who doesn’t love tax savings? The Budget has extended the Low and Middle-Income Tax Offset (LMITO), worth up to $1,080 annually (or $2,160 for couples), for an additional 12 months to cover the 2021/22 financial year.
If your taxable income is between $37,001 and $126,000, you will get some or all of the low and middle income tax offset.5 This is in addition to the low income tax offset.
If you’re eligible for the LMITO, it’ll hit your pocket after you lodge your tax return for the 2021/22 financial year.