Update on the Australian region
We provide an update on Australia's political, economic and fiscal changes.
Australia's economic situation- Plenty to talk about
In this article, David Baumgartner of Baumgartners in Melbourne, Australia provides updates on Australia's economy, political situation and tax system.
At the current time, the following updates are to be taken note of in Australia:
- An unexpected return of the conservative Liberal Government in the May election
- The Reserve Bank of Australia (RBA) has cut the benchmark interest rate three times since May 2019 to 0.75% - its lowest level on record and a U-turn from its previous stance of lifting rates
- Australia’s first budget surplus in almost 12 years is still on track for FY20 with a FY19 deficit of just $690m (down from estimated $4.2b at budget time thanks largely to increased commodity prices and exports)
- Economic growth has slowed right down to 1.4% for the year to 30 June 2019 – levels not seen since the global financial crisis, but the fundamentals of the economy are still strong largely driven by commodities. Meanwhile individuals are seeing strong asset prices but little cash or wage improvement to lift their living standards
- Some weakening in unemployment rate to 5.3% and low levels of wage growth continue to impact on economic growth and output
- Housing in Sydney and Melbourne have shown a sharp rebound at 3.5% this quarter, prompting some concern about a bubble being fuelled by interest rate cuts.
- 1.6m returns lodged with the ATO in the first two months of the year with individuals seeking to access the Low and Middle Income tax offset recently legislated by the government
- Instant Asset write-off increased to $30,000 and extended to medium businesses with a turnover of less than $50m
- Single Touch Payroll (real time salary and super reporting to ATO) commenced for small business with <20 employees form 1 July 2019
- The ATO’s Tax Avoidance Taskforce continues to be bolstered with $1b allocated over the next 4 years. Its focus will be to expand its compliance activities targeting multinationals, large public and private groups and high wealth individuals with greater scrutiny on promoters of tax avoidance schemes. It is estimated the taskforce will raise $3.6b in new tax liabilities over the forward estimates.