Federal Budget; softly, softly for an election in early August?
Federal Treasurer Joe Hockey last night handed down the government’s 2015 – 2016 budget with some surprises and minor wins for some people in the food sector.
The government has stepped away from the harsher politically untenable approach that was taken in its first budget in 2014. Several of those budgetary plans were perceived as unfair and were blocked by a hostile senate minority combining with the Labor opposition.
By contrast the 2015 budget shies away from major change or structural reforms.
Several political commentators are suggesting that this budget is a prelude to an early federal election, possibly in August 2015. The ALP national conference in Melbourne 24 -26 July 2015 is likely to show the ALP engaged in vigorous debates on contentious issues like same-sex marriage, tax reforms and global politics. Accordingly, the Liberal National Coalition may take the opportunity to highlight Labor dissension at that time in a snap-election campaign.
‘Small Business’ measures
Small businesses were a winner in what Treasurer Hockey described as his ‘have a go budget’.
Businesses that have annual revenue less than $2 million a year will have their tax rate reduced from 30 per cent down to 28.5 percent. For businesses on the even smaller end of the scale including sole traders, partnerships and other unincorporated organisations, they will have their tax rate taken down by 5 per cent.
Small businesses looking to make capital purchases such as new equipment, tools or electronic devices, bought will be able to claim 100 per cent tax deductions for the cost. Previously there was a $1000 threshold or a self-assessed amount of depreciation.
Some are however speculating that this announcement will not actually make a significant difference believing Australian small businesses often do not invest largely into equipment. However others disagree. For example cafes and such have chairs and tables that they need to upgrade.
Unexpectedly, moves to cut pharmaceutical rebates were not mentioned in the budget. It had been previously been expected to remove up to $5 billion from the Pharmaceutical Benefits Scheme (PBS). The PBS is a system by which the Australian government reduces the cost of medicines for Australians by providing government subsidies. It had been predicted that the government would make a 5 per cent cut in its prescription drug funding.
A large push from health advocacy groups and pharmacists dissuaded the government from enacting major cuts for the time being with only $252.2 million expected to be cut over five years by changing the prices of certain drugs.
“Pharmaceuticals were amongst a number of expected cuts that didn’t happen,” said Mr Neil Jones Director of Tax Banter Pty Ltd told Australian Food News. “No savage cuts were made.”
The 2015 Budget promises farmers financial injections such as $250 million being allocated to keep the Drought Concessional Loan Scheme running and $25 million being set aside to help farmers deal with damage caused by pest animals in drought areas.
Cattle farmers in northern parts of Australia will also be deriving benefit from $101.3 million over the next four years to be allocated towards improving supply chain roads.
Richard Bridgart, a Tax Partner at Deloitte Private Melbourne told Australian Food News that one of the positive budgetary announcements for primary producers was that they can immediately claim tax deductions on new fencing and also for water dams and other water holding structures.