The Federal Government 2026 Budget
There is little doubt that the 2026 Federal Budget is a big spending, big taxing traditional Labor budget the likes of which we have not seen in Australia for decades and one that you will ignore at your financial peril.
Federal expenditure is expected to be up $25 billion to $762 billion, and this is after expected cuts of $38 billion to the NDIS program - a program that successive Governments have been trying to scale back for more than a decade.
This massive expansion in Government spending is directly at odds with the Reserve Bank ‘s attempts to cool the economy and reduce spending and will only lead to ever higher domestic interest rates.
At the same time, the Government is attempting to put in place a minimum tax rate of 30 per cent on most forms of income, both obtained from growth in asset prices as well as wages, for everyone except those earning less than $45,000 a year in wages.
The Government is trying to generate a smokescreen to suggest this is about inter-generational wealth and supporting the desire of younger Australians to buy their first home. It is nothing of the sort.
While there have been some meagre offers in the way of a small tax cut and an instant tax deduction of $1,000 for wage earners, the Federal Government will be collecting an extra $18 billion from everyday workers, mostly younger Australians, over the next twelve months.
Increased Government spending will lead to greater inflationary pressures and put ever more pressure on the Reserve Bank to increase interest rates, which in itself makes it harder for every young person to buy a home.
To avoid the harsher measures in this budget, Australians will be best advised to focus on owning their own home and to place any other assets they might accumulate inside superannuation. These are the only tax havens left to ordinary Australians.
For many who have been resting on the laurels and holding onto an investment property or properties to fund their retirement, now is the time to rethink that strategy, sell and get as much money into superannuation as possible.
If you know of anyone who is unsure how to best arrange their finances as they move into retirement, particularly in light of this latest Federal Budget, please encourage them to contact me.
It could be a lifesaving, if not retirement saving, moment for them.
Patricia Howard
0427 429 817
Patricia@howardosmond.com.au