Australian National Budget Released

May 12, 2010 Taxation in Australia

Financial crisis will hurt jobs, Swan warnsThe Australian Government has released its national budget for the 2010-2011 financial year. The tax system changes and spending cuts detailed within the new budget are expected to return the Government spending to a surplus within two years.

On May 11th the Australian Government publicized the 2010-2011 Commonwealth Budget, which “further strengthens the economy and secures future growth.” According to a statement released alongside the Budget, strict adherence to the planned stipulations will result in net Government debts peaking at 6.1 percent of GDP, half of the Government’s previous projections and only one tenth of the level currently seen across major advanced economies. The national budget deficit will reach AUD 40.8 billion (approx. USD 36.5) in 2010-2011, which is AUD 16.3 billion (approx. USD 14.6) below projections made in 2009.

The new Budget introduces a number of key initiatives designed to increase the Government’s total tax revenues and increase efficiency, both within the economy and national taxation collection. Among the newly introduced rules, the Government intends to increase the personal income tax-free threshold to AUD 16 000 (approx. USD 14 307.2). Tax liabilities on interest earned will be reduced by 50 percent for the first AUD 1 000 (approx. USD 894.2) earned in a given year. Several other tax deductions will be introduced to benefit the majority of Australia’s 6.4 million taxpayers. The Budget also confirms several tax changes proposed within the “Henry Review”, a Government commissioned assessment and reform plan of the Australian tax system. The Government confirmed that the 40 percent Resource Super Tax for energy and mining companies will be introduced on July 1st 2012. During the 2013-2014 fiscal year the corporate income tax level will be reduced to 29 percent, and to 28 percent in 2014-2015. Although, small businesses will see a reduction in effective corporate taxes one year earlier, in 2012-2013.

According to the Australian Government the new Budget will modernize the national tax system and be of great assistance to working families across the country. If successful, the raft of changes will also grow the national economy, real wages and after-tax income of all Australians.

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