This week’s huge spending budget is designed to lift the country out of a Covid coma and in a word, it’s about jobs.
Specifically, it’s about jobs for young people. And there are lower taxes when you have one.
It’s also about helping them get on the property ladder.
So, here is how the under 35s can work the new system - one that is finally skewed a little to them, rather than against them.
The new job opportunities
Australia’s youth have been on the front line of this coronavirus crisis, with most job losses in the casualised sectors they dominate, such as retail, hospitality and tourism.
So it’s tremendous that there are specific measures designed to create thousands of new jobs.
The first is that an extra 100,000 wage subsidies for apprenticeships and traineeships have been added to the 180,000 that were announced when this COVID craziness began.
At a cost of a further $1.2 billion, this is for new apprentices and trainees, the subsidy is 50 percent of their wages and applications are open already.
Still on the jobs theme…
Employers will soon also be paid if they get people off JobSeeker and into their businesses. The so-called JobMaker hiring credit is immediately available to employers who hire people aged 16 to 35.
For new hires under 30, it will be payable at $200/wk; up to 35, it will be $100/wk.
Employees must work at least 20 hours a week and all businesses other than the major banks will be eligible.
Now, you may have heard people complaining that this disadvantages older workers. And it does.
But be aware there are some traps for the younger workers who receive these jobs, too. The wage subsidy only lasts for 12 months of a worker’s employment, and for the next three years of employees, so you may need to work at making yourself indispensable to keep a job.
Related to these youth employment measures, $7.5 billion of infrastructure spending is being brought forward. That means lots of the new jobs will be in construction and related industries.
Less tax once working
Once you’re earning over $37,000, you’re in the money. Turbo charged tax cuts will mean:
On a salary of $45,000 to $90,000, you’ll get an average tax cut of $1080 a year… or about $20 a week
On a salary of $90,000-plus, you’ll get an average tax cut of $2500… or roughly $50 a week.
These tax cuts were already scheduled but they’re being brought forward by two years from 2022.
It gets better as well. Twelve months of this year’s tax cuts will be crammed into eight months… so you’ll get MORE than the above weekly figures this tax year.
And you’ll get it soon. Labor has said it will support the cuts so the ATO may simply go ahead and switch them on, which will mean they could land within weeks.
Here’s hoping, if you’re currently on JobKeeper, that your employer can afford to step in and take over that portion of salary when the wage replacement is scheduled to end in March. If so, more of any salary above that will come to you thanks to these tax cuts.
If you don’t have a job or are on JobKeeper only
What the tax cuts don’t do, because they are targeted to higher incomes, is make up for a $300 drop in income if you’ve lost that much (or more) on JobKeeper or JobSeeker.
BUT don’t miss this loophole, the $1,304 JobKeeper, JobSeeker loophole which might mean you can claim both.
Make sure you check it out when times are tight.
A leg up onto the property ladder
Finally, there are now an extra 10,000 extra places in the government’s first home loan deposit scheme, where you only need to come up with 5 per cent deposit to get onto the property ladder.
Even so, you also still avoid eye-watering Lenders’ Mortgage Insurance, which is usually payable unless you’ve saved a 20 percent deposit.
You need to build or buy new – you could also get the $25,000 HomeBuilder incentive if you sign a contract before the end of the year – and there is an income cut off of $200,000 for couples and $125,000 for singles.
However, just a word or warning: Coupled with the rash, recently announced relaxation of borrowing rules, I’m worried. Please follow my safe borrowing rules.
Overall, though, for young people, 2020 just became a little brighter.
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