At 7.30pm on 11 May 2010, the Treasurer, Wayne Swan, delivered the 2010-11 Commonwealth Budget, the third for the Rudd Labor Government. The Treasurer is forecasting a cash deficit for the 2010-11 year of $40.8 billion (being 2.9% of GDP), with the fiscal or accrual deficit estimated at $39.6 billion (being 2.8% of GDP). The $40.8 billion deficit is $16.3 billion less than expected one year ago. The Treasurer is predicting a return to surplus in three years, three years earlier than expected.
There are 3 proposed changes that the Treasurer says will ease the cost of living and make tax time simpler:
- raising the effective tax-free threshold to $16,000 from 2010-11;
- granting a 50% tax discount on up to $1,000 of interest income; and
- allowing an optional standard deduction for work expenses and cost of managing tax affairs.
However, contrary to media speculation, there is no announcement in the Budget about removing the requirement to lodge a tax return by persons with "simple" tax affairs.
There will also be a legislative fix to the CGT consequences of earnout arrangements, currently higlighted in draft Taxation Ruling TR 2007/D10.Most of the other measures are concessionary in nature - there are very few "integrity" measures in this Budget which, after all, will be the last Budget before the next Federal election. However, many of the changes do not commence until 1 July 2011.