Tonight’s Federal Budget 2016 announcement focused on tax reform, small business, superannuation and infrastructure. Overall, the Budget is positive for the WA property industry. It’s set to encourage growth in the economy, which will be a welcomed boost to our local market.
Most importantly, it was reaffirmed that negative gearing and CGT provisions will remain in their current form with no changes. This demonstrates the importance the property industry has on the day-to-day lives of West Australians.
It’s also good news for small businesses with the tax rate dropping to 27.5 per cent in the first year before reducing to 25 per cent by 2026.
The REIA, our national body, attended today’s budget ‘lock-up’ and have prepared a detailed wrap up of the budget priorities.
Read the REIA budget wrap up
The nation’s economic indicators
- The deficit will fall from $37.1 billion (2.2 per cent) in 2016-17 to $6 billion (0.3 per cent) in 2019-20.
- Economic growth (real GDP) is expected to maintain at 2.5 per cent in 2016-17 and increase to 3 per cent in 2017-18.
- Unemployment will reach 5.75 per cent in 2015-16 and fall to 5.5 per cent in 2016-17.
- CPI will increase from 1.25 per cent in 2015-16 to 2 per cent in 2016-17 and 2.25 per cent in 2017-18.
Ten Year Enterprise Tax Plan - $9.2 billion package of tax reforms
- Reducing the company tax rate to 25 per cent over ten years – the tax rate for businesses with aggregated turnover of less than $10 million will receive a tax cut of 1 per cent to 27.5 per cent starting 1 July 2016. In 2024-25, the company tax rate will be reduced to 27 per cent and reduced progressively by 1 percentage point per year till it reaches 25 per cent.
- Enhancing access to asset backed financing – From 1 July 2018, barriers to using asset backed financing arrangements, for example deferred payment arrangements and hire purchase arrangements will be removed.
- Increasing the small business entity turnover threshold – the small business entity threshold will be increased from $2 million to $10 million from 1 July 2016. This will give more small businesses access CGT tax concessions and unincorporated business tax discounts.
- Increasing the unincorporated small business tax discount – From 1 July 2016, the unincorporated small business tax discount will increase to eight per cent and will further be increased to 16 per in 2026-27.
National Infrastructure Plan – investing $50 billion from 2013-14 to 2019-20
- WA will receive $490 million for the Forrestfield Airport Link.
- WA will receive $261 million for the Section two of the Perth Freight Link.
- Building on the 2015-16 budget, the Federal Government will invest $10.1million to establish the Northern Australia Infrastructure Facility.
For more information on how the budget will effect the WA Residential Property Market, contact Naked Real Estate today.