On Tuesday, 10th May 2017, Federal Treasurer Scott Morrison handed down his second Federal Budget and the Australian economy is expected to rebound from the slowdown caused by Cyclone Debbie that hit the coast hard at the end of March this year. The economy is expected to expand at a rate of 2.75 percent next financial year and 3 percent the following year. Treasury now expects a budget deficit of $29.4 billion in 2017/18 but project a surplus budget of $7.4 billion in 2020/21.

Unemployment is forecast to remain steady at around 5.5 percent and inflation is not expected to shift outside the Reserve Bank's 2 to 3 percent target range, meaning less pressure on interest rates.

The budget contained some positives for small business that we have documented in this newsletter including the Turnbull Government's extension of the $20,000 instant asset write-off on depreciable assets. Businesses with a turnover of up to $10 million now qualify for this concession and it is proposed that companies turning over up to $50 million will have their tax rate reduced from 30 percent to 25 percent over the next 10 years.

In a bid to create jobs and grow the economy, the Government has also committed to investing $75 billion in key infrastructure projects over the next 10 years. These projects are focused around road, rail and airport investments. The budget also targeted Australia's big five banks, multi-national tax avoiders, foreign workers and foreign resident investors, while making voter-friendly announcements in relation to health, education (particularly schools funding) and housing affordability.