Federal Budget 2020 Discussion, and will you spend your tax cut?

scotty on 06/10/2020 - 09:10

It's Federal Budget night tonight, and as per what we have done in previous years (2019, 2018, 2017, etc), here's the catch-all thread for any Federal Budget related discussions for this year.

I'll link to ABC when summary article becomes available. Meanwhile, here's the prediction from SMH

  • Lots of infrastructure spending & manufacturing aids
  • Supplements to salaries of apprentices & trainees
  • Income tax cut brought forward to this year

I think most relevant to majority of OzBargainers here would be the tax cut.

The tax plan means people who earn between $45,000 and $90,000 will take home an additional $1,080 this financial year.

Workers who earn more than $90,000 will take home up to $2,565 extra, with people earning more than $120,000 receiving the maximum benefit.

Government would be hoping that with more disposable income, people will be spending more to add a bit of boost to the economy. However the question for the ozbargainers is — will you spend your up to $2.5k tax cut this year? If so, how would you spend it?

Poll Options expired

  • 19
    Yes, I will spend even more to help the economy to grow!
  • 35
    Yes, I will spend every cent of my tax cut
  • 164
    Maybe I will spend some and save some
  • 560
    No, they will go straight to my saving / offset account
  • 23
    No, I'll save more for Bikie-hire, in preparation for the upcoming anarchy
Financial Federal Budget

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Comments

      • Bargain Hunter 007 on 09/10/2020 - 08:57
        +2

        I understand what you're saying, I just don't agree that it is a fair way to determine someones wage.

        Simply providing value seems too simple a metric to ascertain someones worth.

        • Dogsrule on 09/10/2020 - 13:50

          I believe there is a strong moral component to being productive. Requiring others (by force I may add) to provide value to you without providing roughly equal value to them (adjusted according to your abilities of course) is tantamount to slavery. A large proportion of my own judgement of a person's worth is influenced by this metric.

          This value contribution can be time shifted of course, a retiree that has saved for retirement their whole life to prevent burden on the taxpayer has fulfilled their moral obligation to society.

          As for determining somebody's wage, I suppose, if the majority of people are only capable of relatively low skill work, rendering their contribution of low economic value due to the high supply of their labour, I guess that illustrates that most of the things that provide a very high quality of life for citizens of Western nations are probably provided by a small cohort of highly skilled, highly productive people.

          There are always exceptions, people that receive high income but produce little value, but I believe they aren't actually numerically common relative to the high income high output people, they're just highly visible.

    • sir-screwball on 08/10/2020 - 22:06
      +2

      Your approach is refreshing and you have my respect, sir.

    • conan2000 on 08/10/2020 - 23:45

      @Bargain Hunter 007 I'm in a similar boat, it won't make any notable difference to me the tax cut, so probably just sit in an offset account. But most people I know, high or low income earners have massive lifestyle creep and will spend the extra cash. I know my old boss who would have been earning about $200k lived pay cheque to pay cheque for the most part, and my partner's boss as well (likely similar salary) was exactly the same.

      We might be in the minority here on Ozbargain about how we'll use the funds,

  • Intoxicoligist on 08/10/2020 - 11:57
    +1

    As someone making ~95k I'll be paying my car rego and then saving the rest. Hows that stimulate the economy?

  • fvalemus on 08/10/2020 - 12:09
    +2

    I hope there's a really good deal on Eneloop.

  • fvalemus on 08/10/2020 - 12:11

    How is this tax cut going to be passed? during tax return or the employers are going to adjust the PAYG withholiding hence sprinkle per pay period?

    • herecomestheoost on 08/10/2020 - 13:35
      -1

      Employers will be given a new tax table.. It's back dated to July 1 and so it will be turbo charged for the first few months.

      • fvalemus on 08/10/2020 - 13:54
        +1

        I see, so $210 a month, but the first few months will be more.

        Not bad.. will be spent definitely, to pay off the mortgage faster.

      • cnrmlj on 08/10/2020 - 16:52
        +1

        That’s not my understanding. I thought you got the tax cut from whenever the law passes and payroll implements it. You then get the reduced tax from July to October next tax return.

        • herecomestheoost on 08/10/2020 - 17:17

          I must have read either fake news or old news.

          "Any 'over-withholding' that occurred prior to the employer updating their payroll software and processes will be included in the tax assessment of the employee at the end of the income year," the ATO said.

      • sareth on 08/10/2020 - 17:58

        It definitely will not be backdating to July 1. That's not possible. It will apply for the next 8 months, and the preceding 4 will be claimed on tax returns after EOFY.

        • conan2000 on 08/10/2020 - 23:47

          Correct, although there was some confusion about this initially. Not sure if it was bad reporting, or confusing messaging from the Government. But the missed 4 months will just be dealt with at tax time.

  • TheMindsetTraveller on 08/10/2020 - 12:15

    Giving businesses instant tax write-off is good BUT they could have extended this to personal taxpayers rather than tax cuts.

    IF they allowed the first $20,000 for each taxpayer to be deducted from tax IF they spent money on discretionary items like buying a laptop, a fridge, $750 for dinner, $300 at the wine bar, next month another dinner is $230 and so on - that would stimulate the economy AND give those who spend a tax benefit.

    Right now, all taxpayers get some savings BUT there is ZERO incentive to go out and spend it especially that there is fear of insecurity let alone the pandemic, there is also the idea that we should try to stay home and be responsible as well, and a good reason to pay off debt or save for a rainy day.

    • netjock on 08/10/2020 - 12:57
      +1

      Giving businesses instant tax write-off is good BUT

      It just means now business will get $0.30 for $1 they spend rather than having to depreciate it over the years allowed. Zero difference. Just pushing forward purchasing decisions to help with cash flow. It ain't magic money.

      IF they allowed the first $20,000 for each taxpayer to be deducted from tax IF they spent money on discretionary items like buying a laptop, a fridge, $750 for dinner, $300 at the wine bar, next month another dinner is $230 and so on - that would stimulate the economy AND give those who spend a tax benefit.

      Thought that is the tax free threshold or do you mean increasing tax free threshold by $20k? Same effect.

      • TheMindsetTraveller on 08/10/2020 - 13:59
        +1

        I understand it is not magic money and allowing business to depreciate 100% in this tax year versus of a period of years. This has never been applicable to personal spending but given the financial crisis we are in, why can't this deduction be applied to personal spending/consumption too "to stimulate" spending.

        Let's say they allowed any new car purchase up to $100,000 to be tax deductible for personal use. Lets say my income is $100,000, I go out today and buy a $100,000 car and can deduct that come tax time. My taxable income is now $0 but I have already PAYG almost $25,000 from my employer which I will get back as a refund at the end of tax year. hence my car really only cost $75k. If they allowed this many and myself would run out this afternoon and buy a new car.

        The second part is I am not referring to the tax free threshold or increasing it. What I am suggesting is that we would be allowed to deduct $20k, or it could be $30k or $40k or whatever amount it is for discretionary spend. Let's say the said "every restaurant meal you have in the next 9 months is deductible". If you eat out each week at $200, that's $200 x 36w = $7,200 to be able to be deducted off your taxable income. So depending on one's tax bracket, you could get up to 45% back. The theory is people would have to spend first (and stimulate the economy), then deduct if off tax, to get a refund versus the theory of tax cuts where some people may spend the savings, but many would save it / put it into an offset account / keep it for a rainy day which does nothing for economy stimulation.

    • Choc83 on 15/10/2020 - 09:41

      We might see this in other forms (like in the UK) where the government is pitching in by covering 50% of restaurant meals with vouchers.

      Although my guess is that this will result in price jacking

  • SupeNintendoChalmers on 08/10/2020 - 13:18
    +2

    I wish this government had spent their monies instead on developing the largest series of solar farms and batteries on Earth. Imagine Australia being the worlds largest exporter of energy as opposed to being reliant on selling minerals.

    This would have required vision and lack of influence by the coal and gas sectors, this government lacks both the vision and courage to pull away from their owners.

    • Top G on 08/10/2020 - 14:20

      Do you really think we can generate a bunch of power in the outback and ship it off to Indonesia or India , idk where you are thinking.

      The technology doesn't exist for long distance power transfer. You have huge resistance losses over distance with wires. Also you can't just charge and ship batteries around because they are heavy as f.

      I'm not saying solar farms and batteries are bad. But they would be for our own domestic use only at this stage.

      • SupeNintendoChalmers on 08/10/2020 - 14:31
        +2

        I'm not sure how you'd overcome energy dissipation over distance, but we do have some very intelligent people who may overcome and mitigate these issues. No- it wouldn't have to be in the outback, plenty of places around Australia with sun and not in the red centre.

        The same argument about energy dissipation can be said about battery size/weight. Right now I can buy a car lithium battery, which weighs half that of a lead acid battery and takes half the size.

        Innovation is the key

        • Dogsrule on 08/10/2020 - 15:34

          Lithium battery technology has improved by an average of 3% per year and is slowing down as we reach the limits of the chemistry. There is no commercial alternative on the horizon at present. Energy storage is extremely difficult, even stars have very low energy density by volume.

          Energy dissipation has no relation to energy density as you alluded. All energy degrades over time and distance (same thing really), and increases as a function of these. Energy is most stably stored in chemical form, but this conversion itself takes significant amounts of energy to perform - it took millions of years and lots of energy for current supplies of coal and oil to be converted from sunlight. Here is a good vid that explains the problems with hydrogen, but can be similarly applied to other chemical fuel sources:

          https://www.youtube.com/watch?v=f7MzFfuNOtY

          Add to this that our academic infrastructure is meager compared to overseas and always will be - we're just too far away from the academic centers of gravity of Europe and the US.

      • sareth on 08/10/2020 - 17:59

        The technology doesn't exist for long distance power transfer. You have huge resistance losses over distance with wires. Also you can't just charge and ship batteries around because they are heavy as f.

        Weird, we seem to do exactly that every day with oil and coal and LNG.

        • Top G on 08/10/2020 - 19:54

          Yeh unfortunately science doesn't work that way. Coal and LNG are not power they must be processed first.

          • sareth on 08/10/2020 - 22:46

            @Top G: Yes they are. Coal and LNG are stored energy in exactly the same way that batteries are stored energy. They are, literally, the means of long distance power transfer.

            • Top G on 08/10/2020 - 22:50

              @sareth: I was referring to electrical power if that wasn't obvious from the context. I.e solar farms.

        • Dogsrule on 08/10/2020 - 23:05

          Yes and the sun together with other physical processes took millions of years to produce that stored chemical energy that we will burn through in a few hundred years. Transporting chemical energy is easy, producing it from scratch is not.

      • BeepBoop on 08/10/2020 - 18:08

        Do you really think we can generate a bunch of power in the outback and ship it off to Indonesia or India , idk where you are thinking.
        The technology doesn't exist for long distance power transfer. You have huge resistance losses over distance with wires.

        And yet

        • Top G on 08/10/2020 - 19:51

          Yes Singapore a highly developed city state, one the most land poor nations but has the funds to potentially participate in something like this.

          This ain't about liberal or labour policy is just a physical constraint with current science. Forming visions based on future possible breakthroughs is the same as dreaming.

          • BeepBoop on 08/10/2020 - 23:34
            +2

            @Top G: The fact is is the technology does exist, it’s not sci-fi future dreaming. There shouldn’t be anything political about that.

            Australia should be planning for the future because short term thinking dooms us all.

            • Top G on 09/10/2020 - 04:24

              @BeepBoop: Ok selling a solar farm linked up via HVDC to a trading partner. Only other ones within reach are Malaysia, PNG, Phillipines and Indonesia, and I bet ya they wont pay a pretty petty for "clean" tech. At the end of the day it has to be cheaper then alternatives as there is no global carbon tax.

              Also what happens when you piss off China and the cable "accidentally" has a break. No country will want to sign up for such a vulnerable link in volatile times.

              • BeepBoop on 09/10/2020 - 09:23
                +1

                @Top G: How did you determine they’re the only ones within reach? A couple of posts ago you were saying this is all a fairytale.

                Also what happens when you piss off China and the cable "accidentally" has a break.

                The same thing could be said about the internet, I don’t think that’s a good enough reason to not pursue it.

  • cnrmlj on 08/10/2020 - 16:49
    +10

    My wife and I are each getting the maximum cut. I find it absurd and obscene that we are getting it. It will go into the offset account. Not buying something extra because of it.

    Similarly, my daughter who had 2 part time jobs got job keeper form one of her jobs even though she had a second job which got very busy from March but because there were no checks and balances she earned a large amount thanks to tax payers.

    Not complaining or handing any of it back, just highlighting how flawed the system is.

    • [Deactivated] on 08/10/2020 - 16:59

      Well if that's the only way to educate the government, but be warned they are good at stopping people from making their coffer poor.

      Peasants do not negotiate they pay tax vote and die in the governments eyes in Australia.

    • DeeTrance on 10/10/2020 - 20:45

      That may be legal, but doesn't make it morally or ethically right.

  • [Deactivated] on 08/10/2020 - 17:20
    -2

    Imagine working on a project so complex let's say:

    Your a programmer, your working hard, writing code no one else knows or understands, it's all on you, the company knows they can't let you go, your to valuable your income is 160, 000 a year, you know your tax fees are so high including super, that the requested requirements for such s job should be more.

    Your a scientific researcher, researching a medical conditions, the hours are long, but the pays 76000, you pay high taxes work long hours, and mostly enjoy it.

    And lastly a added bonus partner whose a sole earner who argues that it's impossible to get ahead, while married, as a cleaner of $42,000 a year renting to a private owner.

    Different situations, but if they were you would you be complaining based on the level of complexity a job is, and difficulty life can get, what would you do if you were in those situations right now.

    • Laurenlauren on 10/10/2020 - 20:06
      -1

      What?

      • [Deactivated] on 10/10/2020 - 20:32

        Huh

  • Godric on 08/10/2020 - 20:14
    -1

    Depends on the bargains that are posted at the time

  • DeeTrance on 08/10/2020 - 22:38
    +1

    Increase my donations to charities.

    As I get older I find giving, abit of kindness and compassion brings me more happiness.

    • [Deactivated] on 10/10/2020 - 20:33
      +1

      Screw kindness it's all about the bargains, and family no one else.

      • DeeTrance on 10/10/2020 - 20:43
        -1

        What you seek is shallow short term joy. That which does not last nor bring you true happiness.

        • [Deactivated] on 10/10/2020 - 21:45
          +1

          Depends on how or where you narrow down that perspective.

          Don't worry in time you'll feel the same, but I suspect you oppose what's out before you.

          • DeeTrance on 11/10/2020 - 10:24

            @[Deactivated]: Very shallow view.

            • [Deactivated] on 11/10/2020 - 23:27
              +1

              @DeeTrance: That's what it's like to be human, welcome to humanity.

  • T0ken on 09/10/2020 - 08:31

    As the changes were already legislated and if the question was to the reason of the changes in the first place, would you change your response.

    The reason for the changes were an attempt to address bracket creep.
    Thus how would you answer;
    Do you see bracket creep as a problem?

    • worrierwan on 09/10/2020 - 09:40
      +2

      The Libs had 8 years to address bracket creep. The change now is nothing to do with bracket creep, but its their way of stimulating the economy, which will inevitably be inefficient if people only save

    • Loot N Plunder on 09/10/2020 - 11:48

      Lets get this clear bracket creep is nonsense
      The real word you should be using is wealth creep
      If you choose to work and earn more you should pay more tax or do you think you should pay the same as someone on less than 40K?
      Do you think your work is harder, dirtier, than someone on 40k so you should pay the same tax as them?
      A functioning society needs people who earn more to pay more tax, the problem we have in Australia is all our wealth is being off shored by billion dollar multinationals that pay no TAX
      Foxtel is a good example one of Australia's biggest dole bludgers the lists goes on https://www.michaelwest.com.au/top-40-tax-dodgers-2019/

      • Ash SA on 09/10/2020 - 14:49
        +3

        username checks out.

        WTF is same tax? tax amount or percentage?
        if someone burnt themselves preparing for a brighter future while other were either non-serious about studies or unfortunate to have the studies done - those people should not be punished.

        Yes, you read it right,. Punished.
        Big biz houses and giant multinationals must be paying higher taxes in terms of different scenarios - sales tax, this tax, that tax. And they must not be plundering the country.

        but, individuals who are earning more should not be punished. They simply move out of the country. This is what happened to most of third world countries.

        For that reason, there must be another bracket(s) at top level.
        Someone earning 200k-300k per year is not THAT rich to be punished. I know it gonna hurt few here comparing to their pity salaries. Pls don't take offence but look from non-jealous eyes. tax system is not efficient and politicians are using it for their benefit whereas we "the people" are diving into the debates and causing divide.

        I am not from top bracket either. I just visited (read - lived in) few countries and work in finance/economics+IT domain and know how brain-drain happens.

      • Dogsrule on 09/10/2020 - 19:02

        Righto Captain Planet, I’ll bite, but I’ll use data, not opinions. People who choose to work and earn more will continue to pay much more tax than low income earners even after the stage 3 tax cut in 2024. A person on the median wage, say about $55000, will pay $8092 of tax, which equals 14.7% of their wage.

        The guy on $200k will pay $51591 of tax, or 25.8% of their wage, or 6.3x more absolute tax dollars than the median wage guy. Our tax system will remain strongly progressive after these tax cuts. Plenty of money to go around for low/no income earners.

        This tax cut isn’t about multinationals, they don’t pay tax at the individual rates, it’s about the highly productive, high income, mostly PAYG individual earners, the top 10% that pay 45-50% of all income taxes, which by the way represents about 20% of the Governments total tax receipts. That’s right, 10% of Australians pay 20% of Australia’s entire tax bill each year through their personal tax obligations, more than all company tax combined.

      • Dogsrule on 09/10/2020 - 20:34
        +1

        One more thing, I’d like to address an error in my first post. There are about 12.5 million workers in Aus right now. That means about 1.25 million Australians, or 5% of Australians in a country of 25 million, pay 20% of Australian’s tax receipts. Despite comprising only 1/20th of the population, they pay at least 1/5 of the bills, roughly 4x their proportional obligation. That’s a pretty significant burden.

        • Loot N Plunder on 10/10/2020 - 08:02
          +2

          Dogsrules writes :That’s a pretty significant burden.
          You are more than welcome to drop to a lower level of wage if you think you are hard done by for paying to much tax ?
          Hell you could even party gamble take drugs drink alcohol sustain a house have food clothes bills and holiday on forty dollars a day like the unemployed?
          Didn't think so
          You could even be one of those millionaires paying no tax at all? https://nationalseniors.com.au/news/latest/new-ato-data-show…
          Tax is progressive for a reason the ones who can afford it should support those that cant.
          Stop whinging about being a lifter it comes with the territory

          • Dogsrule on 10/10/2020 - 15:27
            +2

            @Loot N Plunder: "You are more than welcome to drop to a lower level of wage if you think you are hard done by for paying to much tax ?"

            Nah I'll just take my deserved tax cut thanks.

            "Tax is progressive for a reason the ones who can afford it should support those that cant."

            I'm not quite sure what you think you're arguing here, I've never expressed opposition to an progressive tax system, I'm simply highlighting the fact that we do have a strongly progressive tax system. The only people whinging in this thread are those who, despite all evidence to the contrary, seem to think we don't have a strongly progressive tax system, and that it will remain so after these tax cuts. Get a clue, the working class aren't hard done by, they receive very significant subsidization through social transfers in kind. Median wage earners pay $279 of tax per week and receive $488 a week back via social transfers in kind.

            "You could even be one of those millionaires paying no tax at all?"

            Did you even read that article you posted? An entire 73 people out of that 1.25 million didn't pay tax, unusual enough that a news article was printed about it. Doesn't change the fact that the rest of those 1.25 million do in fact pay 50% of Australia's income tax bill.

            I suppose I've brought this on myself, expecting people to keep their emotions in check and engage in robust, data driven debate.

            Next…

            • onesandtwos on 10/10/2020 - 15:55

              @Dogsrule: As someone who thinks this budget was a missed opportunity to address some of the structural issues in the economy, I agree with your overall sentiments that we remain a strongly progressively income taxed nation. I don't think it's fair to talk about the highest tax bracket as a proportion of the overall population though, it should working age population which is the 12.5 million, no point including kids and the retired.

              • Dogsrule on 10/10/2020 - 17:36

                @onesandtwos: If you're making the point that children and the retired do not carry a responsibility to be productive, I completely agree.

                However, we can't pretend they don't exist when talking about tax distribution - they must be fed and clothed and housed.

                Unless they are fully funded from their families, (or self supported retirees) the funding for this must come from working age people.

            • [Deactivated] on 10/10/2020 - 20:33

              @Dogsrule: Who pays tax, only on food sure and stuff.

  • Trying2SaveABuck on 09/10/2020 - 08:36
    +1

    Reading some of the comments on this forum make you realise Australia (or maybe just OZB) has a load of over entitled whinging idiots

    • avoidfullprice on 09/10/2020 - 12:32
      +2

      Be inclusive. Also Reddit's and Whirlpool :p

  • Loopenip on 09/10/2020 - 13:37

    Poll option didn't have an "I don't pay tax option"?
    Me right now:

    I don't pay tax :D
    I don't pay tax :(

  • SelfMade on 09/10/2020 - 14:36

    Will be employing more staff due to the JobMaker scheme.

  • RocketSwitch on 09/10/2020 - 14:45

    Pay my mortage.

    • [Deactivated] on 10/10/2020 - 20:34

      Lol you have 80,000 to go

  • Carmen Sandiego on 09/10/2020 - 15:46

    I did the economy help back in July when I got my tax return.

    But, most of my money will go into savings and this "tax cut" helps no one beyond the rich.

    Even with my friends who earn my level or lower, it's not helpful.

  • [Deactivated] on 09/10/2020 - 19:53

    Saving up for a big reno, so it'll go toward that. So I suppose kind of both. Save it, but ultimately spend every penny.

  • quanticism on 10/10/2020 - 00:00

    Dell monitors, PS5 or anything that looks good during Black Friday.

  • [Deactivated] on 10/10/2020 - 18:49

    Two things Australia will be remembered for, having a currency higher then America's in the 20th century, and smashing human right needs for most Australians within the first 6 months with more then adecuate government assistance

    Now we assimilate with America, or china.

  • Wiser on 10/10/2020 - 19:03

    Govt should have invested this money to propel Australian manufacturing.
    Now most of this money spent will reach China and increase income for wealthy businessmen.

    • [Deactivated] on 10/10/2020 - 20:36

      I JUST BOUGHT STUFF ONLINE FROM OVER SEAS, and it includes tax on anything entering Australia.

  • Choc83 on 15/10/2020 - 09:46

    I might not be spending now, but when I finish paying my mortgage, oh boy

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