The centrepiece of the budget was of course the $5.5 billion package for small business. With the real estate profession largely made up of small businesses, this package is obviously very good news for the sector. 

Many agents will in particular welcome the changes to the Fringe Tax Benefit (FTB) arrangements. As part of Tuesday’s budget, the Government will allow a FBT exemption from 1 April 2016 for small businesses to provide employees with more than one qualifying work-related portable electronic device, such as a phone, tablet or laptop, even where the items have substantially similar functions. This measure will apply to businesses with an aggregated annual turnover of less than $2 million.

The budget also includes tax cuts for small businesses with the Government set to reduce the company tax rate to 28.5 per cent for companies with an aggregated annual turnover less than $2 million. Companies with an aggregated annual turnover of $2 million or above will continue to be subject to the current 30 per cent rate on all their taxable income.

Pleasingly, there were no changes to the current negative gearing or capital gains tax arrangements. REIA had strongly advocated to Government that both of these measures should be retained in their current form and we welcome the Government’s decision to listen to the sector on this important issue. Foreign investment also featured prominently in this year’s budget although there were no surprises with the new fees for foreign investment applications set at the same rate as proposed earlier this year. The budget papers did however include the projections for the revenue raised from this measure, which is estimated to be $735 million over four years. REIA had also strongly advocated for increased funding to strengthen compliance and enforcement and so we welcome the decision to allocate $66 million to the Department of Treasury and the Australian Tax Office to carry out this function.

More broadly, a return to surplus is projected within the budget before 2018-19 although the Government has projected a significant reduction in the deficit by 2019. This significant reduction in the underlying cash balance without any significant expenditure cuts appears ambitious.