Budget 2016: What we know so far

It is exactly one week until the Turnbull government hands down its first budget, a major test before Australia is asked to head to the polls on July 2.

After backing away from broadening the goods and services tax and offering substantial company and personal tax cuts, plenty is riding on this pre-election budget.

The federal budget will be handed down around 7.30pm next Tuesday, a week earlier than originally anticipated in order to accommodate a double dissolution election.

Here’s what we know about the budget so far.

The government won’t touch negative gearing, but will tinker with super

On the weekend, Turnbull revealed he won’t be making any changes to negative gearing in this year’s budget.

“Nearly two-thirds of Australians who make a capital gain on their investments have a taxable income of $80,000 or less,” Turnbull said in a statement.

“Driving down the value of the most important asset for most Australians is not a strategy for economic growth and enhanced prosperity.”

This is in contrast to Labor’s plan, which is to restrict negative gearing to newly-constructed homes by 2017.

However, the government is expected to make changes to superannuation, by cracking down on incentives for the very wealthy.

High income earners will receive tax relief

Treasurer Scott Morrison has previously indicated the temporary “budget repair levy”, which taxes people earning more than $180,000 at an additional 2%, is to be axed.

The government is also planning to raise the $80,001 income tax threshold in a bid to tackle bracket creep, according to Fairfax.

This would likely leave people in the top two income tax brackets with more money in their pockets in the near future.

Small businesses aren’t too hopeful after last year’s cash splash

Despite last year’s budget containing a wide range of policies that were well received by the small business community – such as the $20,000 instant asset write-off scheme – SMEs aren’t too confident about this year’s budget.

In fact, close to 40% of small businesses think next week’s budget won’t include anything beneficial to their business, according to recent research.

There won’t be a GST hike or substantial company tax cuts

As Morrison has previously indicated, the government has backed away from a GST hike after crunching the numbers.

This means there won’t be enough money in government coffers to fund a substantial company tax cut.

However, both Morrison and Turnbull have left open the possibility of a small tax cut for businesses.

Labor has told SmartCompany it is still committed to a 5% small business tax cut.

Is this year’s federal budget going to have a significant impact on your small business? Is there a policy you’d like to see scrapped, or extended? Email news@smartcompany.com.au