Growing the economy, getting Aussies back in jobs, and lowering the unemployment rate.
These priorities are at the top of Treasurer Josh Frydenberg’s agenda as he puts final touches to the 2021-22 Federal Budget to be delivered on 11 May.
The “pandemic budget” will contain measures to boost job skills, infrastructure, tax, energy, digital technology and deregulation, he said in a speech last week.
“The Budget will lay out the next phase of Australia’s economic recovery plan, to grow our economy so we can deliver the jobs and guarantee the essential services Australians rely on, and keep Australians safe.”
The new goal is to get unemployment to below pre-COVID levels.
“Both the RBA and Treasury’s best estimate is that the unemployment rate will now need to have a four in front of it to deliver this outcome,” Frydenberg said. “We want more people in jobs and in better paying jobs.”
While the plan will be laid out in full at 7:30pm AEST Tuesday, the Government has already outlined some areas that will get funding. Here’s everything we know so far.
Superannuation will go up as planned
The Government has set a timeline for the superannuation guarantee rate (the percentage of your pay that goes to your super fund) to go ahead. A rise of 0.5 per cent is scheduled every 1 July until 2026, at which it will hit 12 per cent.
The Government was reportedly considering hitting pause on these plans, but it is expected to allow the scheduled increase to go ahead. This will mean the current SG rate of 9.5 per cent will rise to 10 per cent after 1 July.
Super Guarantee $450 per month threshold to be removed
The Superannuation Guarantee $450 per month eligibility threshold will be removed from 1 July 2022. As a result, employers will be required to make quarterly Super Guarantee contributions on behalf of such low-income employees earning less than $450 per month (unless another Super Guarantee exemption applies).
The Retirement Income Review estimated that removing this $450 per month threshold would generate additional Super Guarantee payments each month for around 300,000 low-income individuals (63 per cent of whom are women).
The measure will have effect from the start of the first financial year after Royal Assent of the enabling legislation, which the Government expects to have occurred prior to 1July 2022.
Primary 183-day test for individual tax residency The Government will replace the existing tests for the tax residency of individuals with a primary "bright line" test under which a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident.
Individuals who do not meet the primary test will be subject to secondary tests that depend on a combination of physical presence and measurable, objective criteria.
The new residency rules are based on recommendations made by the Board of Taxation in its 2019 report Reforming individual tax residency rules — a model for modernisation.
Date of effect The new rules will come into effect following Royal Assent of the enabling legislation.
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