We were told that this would be a tough budget, and the Government's mantra has held true. The Treasurer has had the unenviable task of choosing between multiple deserving reforms, while delivering a $1.5 billion budget surplus in the face of plummeting tax receipts.
In terms of the broader economic narrative, the return to budget surplus is intended to demonstrate the Australian economy's full recovery from the global financial crisis. But the economic data shows the limitations of this recovery. Many industries continue to experience slow growth, and certain regions, such as Victoria, are already growing at below trend rates. The Government's response to this is to structure a budget that is designed to spread the benefits of the resources boom.
Whilst there were a number of significant announcements and leaks prior to the budget, the question on everyone's lips was "Where is the surplus coming from?". We can now reveal the answer:
- Non-residents (through increases in Managed Investment Trust withholding, Living Away From Home Allowance reforms etc.); and
- High income earners (through changes to employment termination payments and superannuation).
The key positive tax measures, such as loss carry-back and small business write-offs, were previously announced. But business will be pleased they have not been funded by cuts to R&D incentives and changes to thincapitalisation.
Due to the tough budgetary constraints there are limited new infrastructure and transport initiatives. The first new initiatives will kick in during the 2014-15 year.
This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2011 Moore Stephens Australia Pty Limited. All rights reserved.
