On Tuesday, 11 May 2021, Treasurer Josh Frydenberg handed down the 2021-22 Federal Budget, his 3rd Budget. Mr Frydenberg said the Australian economy has rebounded at its fastest pace on record over the latter half of 2020. Nevertheless, the impact of COVID-19 will see the deficit reach $161bn in 2020-21, improving to $106.6bn in 2021-22, before further improving to $57bn in 2024-25. The Treasurer noted that the 2020-21 deficit is $52.7bn lower than was expected just over 6 months ago at last year's Budget in October 2020. JobKeeper has played its role with nearly one million jobs added since May 2020, Mr Frydenberg said. The Government believes the 2021-22 Budget will consolidate these gains and put the economy on course for the unemployment rate to fall below 5%, reaching 4.75% by the June quarter 2023. Real GDP is forecast to grow by 1.25% in 2020-21, rising to 4.25% in 2021-22 and 2.5% in 2022-23.
To reach these targets the Government has committed $291bn (or 14.7% of GDP) in direct economic support for individuals, households and businesses since the onset of COVID-19. The Budget also adds to the Government's existing infrastructure investment pipeline with a further $15.2bn of infrastructure commitments. On personal taxation, in an expected announcement, the Government confirmed that it will extend the low and middle income tax offset (LMITO) beyond 2020-21 so that taxpayers will continue to receive the tax offset (between $255 and $1,080) in the 2021-22 income year.Thomson Reuters Tax News Team; Swati Pandey (Reuters News)
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