The government has handed down its big spending budget in a bid to revive the economy. In terms of individuals, as expected, the government has confirmed that it will bring forward and backdate the previously legislated tax cuts by 2 years. Other measures include retaining the existing low and middle income offset, bringing forward the new low income tax offset (as a consequence of bringing forward the tax cuts), CGT exemptions for granny flats in certain circumstances, and cash payments for some income support recipients.

On Tuesday, 6 October 2020, Treasurer Josh Frydenberg handed down the 2020–2021 Federal Budget. He said the Budget was “all about jobs” (including creating new jobs and getting the unemployed back into work again) and getting the economy moving again. The Treasurer said that COVID-19 will see the deficit reach $213.7 billion this year, falling to $66.9 billion by 2023–2024. This Budget expands the Government’s 10-year infrastructure pipeline and, on personal taxation, confirms that the previously legislated Stage 2 tax cuts will be brought forward by two years, from 1 July 2022 to 1 July 2020.

In its Budget reply speech, Labor has earmarked changes to the childcare subsidy should it win the next election which could occur as early as late 2021. As a part of its plan to get the economy back on track and women working more hours, Labor has proposed the removal of the annual cap of $10,560 (per child) on the childcare subsidy from 1 July 2022 and an increase in the maximum childcare subsidy to 90% from 85%. It will also investigate the feasibility of moving to a 90% subsidy for childcare “for every Australian family”.

ASIC has recently conducted surveillance activity which identified two significant concerns in the labelling of financial products by managed funds. The first of which was confusing and inappropriate product labels across over half of the fund selected, meaning that some cash funds had asset holdings which were more similar to a bond or a diversified fund offering. The second significant concern related to redemption features not matching the liquidity of underlying assets, which occurred in a smaller number of funds, but were nonetheless troubling.

In order to provide certainty for foreign incorporated businesses conducting operations in Australia, the government announced in the 2020 Budget that it will be seeking to make changes to clarify the corporate residency test. While details have not been forthcoming in the days since the Budget, the Board of Taxation has recently released its review on that same topic, potentially providing a glimpse of what the amending legislation may contain, including what constitutes “sufficient economic connection” and “core commercial activities”.