Explore who wins and who loses as a result of Scott Morrison’s 2018 budget.
The Government is pitching a plan to deliver tax relief to lower and middle-income Australians, which it says will benefit more than 10 million people.
The most immediate measure will be the introduction of a low-income tax offset (LITO) – essentially a lump sum on your tax return.
From next July, those who earn up to $37,000 will see their tax bill reduce by $200.
The offset increases incrementally for those earning between $37,000 and $48,000, before the maximum offset of $530 is applied to those earning between $48,000 and $90,000.
The benefit then gradually decreases to zero at a taxable income of about $125,000.
There will also be a measure to combat bracket creep, introduced in stages.
From July next year, people earning between $87,000 and $90,000 will move back into the lower tax bracket and pay 32.5 per cent instead of 37 per cent in tax.
In 2022, the top threshold of the lower tax bracket will be increased from $37,000 to $41,000, meaning more earners will fall inside the 19 per cent tax rate bracket.
Treasurer Scott Morrison says the plan will mean 94 per cent of Australian taxpayers will pay no more than 32.5 cents in the dollar.
Winner: Older Australians
Pensioners will be able to earn more money without impacting their pension under the Pension Work Bonus scheme. The program will be expanded to include the self-employed.
Overall, the cost to the budget is $227 million.
The Pensions Loan Scheme will be boosted to enable everyone over pension age to effectively mortgage their home to the Government to access fortnightly payments.
These payments are now as much as one-and-a-half times the pension rate.
An additional 14,000 high-level home care support packages will also be introduced over the next four years.
Loser: Welfare recipients
The Government hopes to raise an additional $373 million from welfare recipients when it extends data matching activities within the Australian Tax Office in 2021.
It also hopes to save about $200 million by increasing the waiting period for new migrants to some welfare benefits from three years to four years from July 1.
Pre-budget calls to increase the Newstart allowance were ignored.
Neutral: Regional Australia
The Government will provide $161 million over four years from 2018-19 to improve satellite navigation.
This measure will deliver comprehensive positioning across Australia, including to areas without mobile phone coverage.
There is additional funding for the Royal Flying Doctor Service and more places in regional universities.
However, there is no new funding to fix mobile blackspots in regional Australia.
The budget also included no further drought relief to support farmers in drought-affected areas.
Winner: Workers’ super
Big changes in superannuation are designed to secure the retirement incomes of Australians.
A 3 per cent annual cap on fees for accounts with less than $6,000 will be applied.
Exit fees on all superannuation accounts will be banned.
In addition, all inactive super accounts with balances less than $6,000 will be transferred to the Australian Taxation Office, which will then “proactively” reunite these inactive accounts.
Loser: Cash users
The Government wants to crack down on the black economy. It argues many payments are falling outside the tax system.
It will introduce a limit of $10,000 for cash payments made to businesses for goods and services from July next year.
It’s also setting up a Black Economy Taskforce targeting sectors of under-reported income.
The Government hopes this will bring in $5.3 billion over four years.
Winner: Mental health
There is a big investment in mental health care and services for vulnerable Australians, including in those living in regional and rural areas and older people.
There will be an increase of $338 million in mental health funding, focusing on suicide prevention, research and older Australians.
There’s also $83 million for psychological services in residential aged care, and $20 million to support isolated older Australians.
Some $125 million will go towards new research to support an additional 1 million people with mental illness, while there’s $38 million for support to those discharged from hospital after a suicide attempt.
Support services including Lifeline and SANE Australia will also receive more funding to boost crisis hotlines and a suicide awareness campaign.
Loser: Foreign doctors
Australia’s doctor shortfall is easing, so the Government is tweaking its plans.
By recalibrating the system, the Government projects Australia needs 200 fewer doctors per year.
That means a reduced need for foreign doctors, contributing to a saving of $416 million over the next four years.
Winner: Small business
Small businesses now have longer to write off business purchases.
The Government extended the $20,000 instant asset write-off for another 12 months to June 30, 2019.
The initiative was initially introduced in the 2015-16 budget, and has been kicked along at a cost of $350 million over the forward estimates.
Winner: Independent students
Young people from regional, rural and remote communities enrolling in university courses will find it easier to get access to Youth Allowance payments while they are studying away from home.
Eligibility for these payments is based on parental income. The threshold and assessment period for that eligibility test will change so that students whose parents earn up to $160,000 will now be eligible for support.
That threshold increased by $10,000 for each child in the family unit, and will now be calculated for the financial year before the student begins independent study (that is, studying while living away from the family home).
The Australian Security Intelligence Organisation (ASIO) will receive a one-off funding boost of $24 million “to support current operations and undertake preliminary work to enhance future operations”.
There’s also $18 million for a review into legal framework governing Australia’s National Intelligence Community and another $52 million for intelligence oversight.
The additional investment doesn’t stop there. The Australian Criminal Intelligence Commission will also receive more funding, but the amount was tagged “not for publication”.
Loser: Vacant land-owners
People who own vacant blocks of land will no longer be able to claim tax deductions against them from July next year.
The restriction won’t apply to any expenses incurred after construction begins on the vacant block or any land being used by owners to carry out business, such as farmers’ crops.
The Government estimates this will save the budget $50 million over the forward estimates.
Loser: Famous people
“High-profile individuals” will no longer able to take advantage of lower tax rates by licensing their fame or image to another entity.
Currently, these people can license the right to use their image – and the right to receive income from it – to another entity like a trust. This creates the opportunity to take advantage of different tax treatments.
The Government wants to end this practice to ensure celebrities’ tax bills are fair, though isn’t sure exactly how much it will recoup in additional revenue.
Loser: Foreign aid
The freeze placed on the foreign aid program will continue.
At the moment the Government spends $4 billion per year on Official Development Assistance.
That level will not grow with the size of the economy until 2022.
Winner: Medical bills
Six new drugs will be available on the Pharmaceutical Benefits Scheme to treat life-threatening conditions including a number of cancers, HIV and multiple sclerosis.
The budget includes $1.4 billion over four years for medications for refractory multiple myeloma, relapsing-remitting multiple sclerosi, refractory Hodgkin lymphoma, spinal muscular atrophy and breast cancer.
A new drug to prevent HIV was also added to the PBS in April.