08 May 07 Budget 2007-08 IntroductionAt 7.30pm on 8 May 2007, the Treasurer, Peter Costello, delivered the 2007-08 Commonwealth Budget. The Treasurer is forecasting a cash surplus for the 2007-08 year of $10.6 billion, with the fiscal or accrual surplus estimated at $10 billion. On top of the income tax cuts announced last year, there are further income tax cuts, to take effect in two stages, from 1 July 2007 and 1 July 2008.
The Treasurer said that the 2007-08 Budget tax cuts ensure that over 80% of taxpayers face a top marginal tax rate of 30% or less. A taxpayer will need to earn $134,000 to pay an average tax rate of 30% in 2008-09. Taxpayers will not reach the top marginal tax rate until they earn more than three and a half times average weekly earnings in 2008-09.
Other changes include a package of measures that will make it easier for small businesses to meet their tax obligations. Included in the package is a proposal to give more small businesses the option of using a simplified method to calculate their GST. From 1 July 2007, any small business that makes mixed (taxable and GST free) supplies or mixed purchases will be able to approach the ATO to discuss the development of a simplified accounting method for their use.
Large business will also be pleased to see that the $100 million cap on the application of the same business test has been removed retrospectively with effect from 1 July 2005.