Budget night and what happens afterwards
Ok so Tuesday night was budget night.
You’ve probably heard all the updates – but I thought you might be interested in a look at how laws are actually made in Australia.
What’s the budget??
So the treasurer looks at what estimated revenue the government will have (mainly through taxes) – then decides spending on most needed areas (health, education, roads, welfare, etc.).
The government will also make decisions about current initiates to encourage people to do what the government wants. For example where you get a payment (like the $7,000 first home owner grant), reduction in liability (like no stamp duty for your first home), tax deduction (like super deduction) or tax offset (like medical expenses offset).
Just because they announce it – the law still has to be voted on
After they announce the budget plans – those plans still have to go through government to become law.
I remember the school trip I made in year 6 to Canberra – it has to go through the House of Representatives and the Senate.
So the good (and bad) news of living in a democratic country is that not everything they announce will actually happen. Also things can be delayed.
Some initiatives start from Budget night
Some initiatives that they announce will be made into law effective from budget night.
So although the law might take 3 months (or more) to be enacted (i.e. enforceable) – the law will start from 10 May 2011.
For example – this might stop people making a certain deduction FROM NOW ON (i.e. if it was not done before tonight)
Other laws will include grandfathering provisions
Other laws will be made to give people time to change what they are doing.
For example – if the government announces a new 5% tax on bank mortgage transactions (for example) – it might start it from a year away to give banks the time to change their systems so they can work out the new tax and pay it.
Another example of a grandfathering provision might be a company set up before budget night does not have to provide accounts to ASIC, where new companies do.
2011 Budget – New things
I’m not a budget expert (I’ve got better things to do really…). In fact – I’ve done about 5 min research on the net and watched the 9 news interviews. But with that said my take on the budget:
Family Tax Benefit thresholds will stay the same for Part A
Family Tax Benefit part B – will reduce for high income couples.
So if you have a family your payments could stay the same (or reduce if you are already on a high income).
A lot of the other things in the budget are either old news or might not apply if you are young and have a job.
Old News – updates on what has happened from last years’ budget night
There are things from last budget night that have been delayed, or haven’t been made law because the 2 houses couldn’t agree. Or because (knowing politicians) it was a promise that they later decided they couldn’t keep.
Some key items for individuals (and tax) that were announced last year:
I have put in bold the new updates
- The Medical expenses offset threshold (where you get a 20% offset of net medical expenses over $1,500) – was set to rise to $2,000. – This is on the agenda for this year.
- $500 standard deduction – this was planned for 2012/2013. This might be the undoing of H&R Block and ITP because you could just lodge your tax return via e-tax and get a standard deduction of $500 (rather than finding your receipts where you probably had under $500 anyway). Pushed back a year to 2013 – with an increase to the standard deduction to $1,000 in the 2014 year.
- 50% Interest under $1,000 not taxed – because you get taxed on interest, it is a bit of a dis-incentive to save. Will happen in 2012 year as previously announced