The Treasurer, the Hon Joe Hockey MP, delivered the 2015-16 Commonwealth Budget last night, and revealed a $35.1 billion deficit in the upcoming financial year.

The aggregate deficit over the four-year forward estimates period is $82.2 billion. Net debt is estimated to be $286 billion, or 17.3% of Gross Domestic Product (GDP). Unemployment is projected to be 6.5% in 2015-16, and 6.25% by 2016-17. Overall spending constitutes 26.2% of GDP, according to a budget overview produced by political lobbying firm Barton Deakin.  The 2015-16 Budget details $429.8 billion in expenditure items and $398.0 billion in receipts. Real GDP is forecast to grow at 2.75% in 2015-16 and reach 3.25% in 2016-17. 

Combined, this seems like great news and means the economy is going in the right direction, which is excellent for real estate market prospects.

What is in the budget for small business – plenty actually! From midnight last night, all small businesses can claim an immediate tax deduction for any individual assets they buy costing less than $20,000. I’d be inclined to talk to your accountant about how you should maximise this tax break before the end of the financial year.

From 1 July 2015, small companies with annual turnover of less than $2 million will have their tax rate lowered, from 30% to 28.5%. Some experts are saying this cut should have been more significant, but for mine, this is a great start, especially given the extent of the budget deficit that the Government is attempting to manage.

The Government will reduce red tape within the Fringe Benefits Tax (FBT) system by expanding the FBT exemption for workrelated portable electronic devices such as smart phones, laptops and tablets.

There will also be a 5% tax discount to unincorporated businesses with annual turnover of less than $2 million from 1 July 2015. This delivers a tax cut of $1.8 billion over the next four years. Again, talk to your accountant if you feel this initiative applies to you.

For those considering starting a new real estate office, the Treasurer will help ease the financial burden by allowing you to immediately deduct the costs incurred when starting out. There will also be capital gains tax relief for those planning on restructuring an existing business – although the detail here is still a little hazy – so again be sure to talk to your accountant about maximising this announcement.

Tax reform is on hold for now. To coin a phrase from Sir Humphrey of Yes Minister fame, it would take a “courageous” Treasurer to tamper with the existing tax arrangements that benefit property investment. Thankfully the Federal Government has wisely decided not to tamper with the existing negative gearing and capital gains tax discount regimes. At the same time, there are moves by the states to address stamp duty concerns. So watch this space for news as this issue unfolds.