Australians are set to be hit by major tax changes, including losing access to a popular concession, in this year’s federal budget, which is shaping up to be one of the most significant in decades.
The budget is set to contain three central packages — tax reform, spending savings, and productivity and investment — that are set to address the intergenerational inequity issues younger people are facing.
Here is what you can expect when Chalmers delivers his budget later this month.
Treasurer Jim Chalmers is about to unveil the federal budget. (Alex Ellinghausen)
The specific reforms, including whether grandfathering provisions will be included for investors who are using the discount and negative gearing, are still a bit of a mystery.
The government hasn’t confirmed the changes, but has repeatedly failed to rule them out when given the chance, with Chalmers and Prime Minister Anthony Albanese instead saying the budget will tackle intergenerational unfairness in the tax system and housing market.
“What we are determined to see is a fairer economy that works for more people, including for younger people,” Chalmers said this week.
If reformed, it would be the first time the CGT discount is rolled back since the Howard government raised it to 50 per cent in 1999 and the first time negative gearing is changed since it was temporarily limited by the Hawke/Keating government in 1987.
In his pre-budget speech in March, Chalmers said the tax reform package would also make the system simpler and sustainable and drive business investment but only “if we can afford to”.
“How much of that we can do in May depends a bit on fiscal considerations, international developments, and also, of course, cabinet deliberations,” he said at the time.
The government will attempt to address intergenerational inequity in the housing market in the budget. (Joe Armao)
Changes include tighter criteria, standardised and evidence-based assessments, fraud prevention and reduced spending on social and community participation per participant and daily activities.
Initial modelling shows the changes will reduce the number of people on the NDIS from 760,000 to 600,000 by the end of the decade.
“It costs too much and is growing too fast,” Butler said in April.
“We can’t afford for the NDIS to continue growing at its current rate.”
The government has announced it will cut billions from the NDIS. (Getty)Defence will receive an additional $53 billion over the next decade, increasing spending to 3 per cent of Australia’s GDP by 2033 under the NATO methodology.
US President Donald Trump has been pressuring Australia and NATO countries to raise their defence spending, complaining that the US does a lot of the heavy lifting.
The funding boost, announced last month by Defence Minister Richard Marles, was partly paid for by the sale of military land and will deliver greater warfare capabilities, systems and communications.
The ADF is getting a $53 billion boost. (Australian Defence Force)The federal government halved the fuel excise and removed the Heavy Vehicle Road User Charge from April 1 to June 30 to provide some relief for motorists facing soaring fuel costs, which will be funded in the budget.
The measure was estimated to reduce fuel costs by 26.3 cents per litre and almost $19 on a 65-litre tank.
The Australian Competition and Consumer Commission is monitoring fuel prices across the country to ensure the cost savings are being passed on.
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