2020 Federal Budget Recap
The 2020 budget has been handed down and it was no surprise to anyone that the focus was jobs. To further understand how this may affect you and your self-managed superannuation fund, our SMSF Accountant, Megan Mashford has summarised some points below:
The Government’s broader economic plan to be a much more self-sufficient country, looking afterlives and livelihoods of Australians, has a renewed focus on business in all regions.
There were few surprises in the announcement, it appeared to be a budget of least resistance, almost guaranteed to be legislated without argument by the opposition.
We know to have a strong economy we need to have unemployment at less than 6% and as a result the budget allows for targeted measures designed to get people working, businesses growing and thus stimulating the economy.
Debt is as cheap as it has been since Federation, and experts agree there is no concern there, even though by 2031 we will be a little over 1 trillion dollars in debt which will be 55% of GDP.
Pleasantly, the Government committed to their election promise that there will be no adverse tax changes to the superannuation system. In addition, for the first time in several years, there were no measures specifically relating to SMSFs in this year’s Budget.
The budget summary of key superannuation, retirement income and personal tax;
- – Personal income tax cuts
- – A YourSuper portal to compare MySuper funds
- – ‘Stapled’ superannuation accounts – a new default system
- – Increased benchmarking tests on APRA funds
- – Improved transparency and accountability of super funds by strengthening obligations on trustees
Personally, when I listened to the budget, I was also listening for what wasn’t said. The entire budget is predicated on a successful vaccine for Covid-19 being found and administered. There is an assumption that our internal borders will be open by Christmas this year and internationally by the end of 2021. It’s also built on the premise that there is no other global crisis happening simultaneously to Covid-19. These assumptions mean that we are looking at a budget that may well be a best-case scenario given the fragile foundations.
In broader terms we are anticipating that borrowing costs will drop further for Australians in the short term, the US dollar will continue to dip over the next 18 months and in turn the Aussie dollar will continue to rise.
Make no mistake, these are unprecedented times, we are currently experiencing the largest peacetime economic contraction since the 1930s. A budget is just that, a budget, the proof really is in the pudding.
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