Federal Budget 2020-21
Last night the Federal Treasurer, The Hon Josh Frydenberg MP handed down the 2020-2021 Federal Budget.
It goes without saying this year has been unprecedented in Australia’s history. There have been large spending programs to support Australian’s health and livelihoods as a result of the Covid pandemic. This spending, coupled with the associated economic fall-out, has resulted in an anticipated Budget deficit in 2020-21 of $214 billion with further deficits expected over the medium term.
The stand out announcements in the budget are in relation to Stage 2 personal income tax cuts being brought forward from 1 July 2022 to 1 July 2020, a raft of measures for small and medium businesses, assistance for regional Australia to support drought relief and boost tourism and $317M to help Australian exporters continue to access global supply chains.
There are also some key items related to Superannuation, although no changes to the tax treatment of super as anticipated.
Key Superannuation Changes
The announcements in this year’s budget predominately focused on default superannuation accounts. The ‘Your Future, Your Super’ measures will be implemented over four years from 2020-21 and will ‘staple’ superannuation members to an existing superannuation account. This means:
- Australians will automatically keep their superannuation fund when they change employers, stopping the creation of unintended multiple accounts.
- A new online YourSuper comparison tool run by the ATO will help people compare the performance of funds which will be required to meet an annual performance test.
APRA will start to conduct annual benchmarking tests on the net investment performance of MySuper products from July 2021. Superannuation funds whose products fail the benchmarking test(s) will be required to disclose their underperformance to members and give their members the option to move their money to a better performing fund.
The government is also going to legislate increased transparency and accountability of Super funds, ensuring money spent by Super Funds actually benefits members and meets the Sole Purpose Test.
Speaking with the ABC following his speech, Frydenberg acknowledged the budget is based on a set of assumptions, such as the majority of Australians being vaccinated against COVID-19 and borders being reopened. Saying; “There is a great deal of uncertainty, these are predictions… and have been made in a once in a century global pandemic.”
If you would like to review the full budget, you can access further details via the budget website here.
If there is anything you need assistance with, please contact your AMG BDM on the details below.