What We Expect From The 2016 Budget

1. Company Tax

The extent of that cut is likely to be modest, possibly a reduction in the headline rate to 28.5 per cent to match the “small companies” rate introduced last year.

2. Other corporate reforms

The introduction of the $20,000 instant asset write-off for small companies was one of the few undoubted success stories of the last couple of Budgets.

That relief is due to expire in June 2017 and we think there’s a fighting chance that it will either be extended or made permanent.

There have also been steady calls for changes in the system of loss relief for companies to allow small companies (in particular) the ability to carry losses back against previous profits, as well as forward against future ones.

The Gillard government actually implemented such a scheme but the Abbott government then scrapped it. It was, however, popular with small business and the Turnbull government would likely win kudos from the small business community for reintroducing the scheme.

3. Changes to negative gearing

No change

4. Work-related deductions

A House committee has been looking at this and we know the government has been studying carefully the potential impact of change. We don’t believe the economics stack up and the politics certainly don’t — many core voters stand to be hit hard by such a change — so on balance we believe the government will leave this area alone.

5. Superannuation

High income earning will be hit, there is no doubt but I do not think it will be significant.  More importantly  in my opinion the government will be keen to avoid any perception of retrospectivity (changing the rules for money already in the super system) so that might close off options to increase tax rates on funds already in the super system or changes to the way super is withdrawn.

That leaves changes to the way money is put into super in the first place, including reducing the amounts which can be contributed at concessional rates, either by tightening up on caps or increasing the tax rate on money paid into super.

We expect such measures to be targeted at higher earners who are sometimes accused of using super as a tax shelter, rather than as a vehicle for retirement savings.

6. GST

No change.  Will not even be mentioned.

7. Bracket Creep

I expect there to be relief for people earning over $80,000.  Again it will not be significant relief but there will be reform to benefit incomes between $80,000 and $180,000.