Australia

Details

  • Service: Tax, Topics, Federal Budget
  • Type: Regulatory update
  • Date: 14/05/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Grant Wardell-Johnson

Grant Wardell-Johnson
Leader, Australian Tax Centre

+61 2 9335 7128

gwardelljohn@kpmg.com.au

What Federal Budget 2014 means for Australian business 

by Grant Wardell-Johnson, Australian Tax Centre

The Coalition Government’s first Federal Budget 2014 focused on the expenditure side of the ledger for the longer term together with two revenue raising measures to substantially reduce the forecasted budget deficits. In the lead up to the Budget, the National Commission of Audit and economic commentators had a long list of recommendations on how to quickly put a stop to a decade of projected deficits.

This Budget reduces the 2014-15 deficit by approximately $20 billion compared with the projected result for the current year and by approximately $4 billion compared with the December 2013 mid-year forecasts. Although, a significant proportion of this is due to changes in underlying economic conditions.

 

The Government's strategy centres on expenditure savings in the areas of health service contributions, foreign aid, education loan programs, family and other welfare benefits. Coupled with the reintroduction of fuel excise indexation and a personal tax increase (of 2 percent in the highest marginal rate from 1 July 2014 until 30 June 2017), the Budget savings dramatically reduce the forecasted deficits.

 

The Budget also makes room for redirected expenditure priorities in infrastructure and the establishment of a medical research future fund.

 

What does yesterday’s Federal Budget mean for business?

 

  • the different impacts of this new budgetary framework are evident when comparing business models with dependencies linked to social or industry welfare programs as against those focused on infrastructure
  • the revenue projections make a strong case for tax reform
  • there will be growing anticipation for the release of the 2015 White Papers on Taxation and Federation Reform.
 

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Federal Budget 2014

Federal Budget 2014
KPMG's review of the major implications arising from the 2014 Federal Budget.