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Federal Budget 2019

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The Federal Treasurer, Mr Josh Frydenberg, handed down the Government’s pre-election Budget last night – 2 April 2019. There have been significant improvements in the forecast budget deficit/surplus with the 2019 deficit forecast at $4.2B (down from $14.5B in last year’s budget) and then surplus results in the following 3 years of $7.1B, $11.0B and $17.8B respectively. In respect to non-tax matters, there are significant planned expenditure in the year ahead in the following areas;

  • $1.1B on Road Projects – mostly in Victoria, NSW and Queensland.
  • $3.5B on Energy – the Climate Solutions Package
  • $6.3B on Drought Support for Regional Australia
  • Creation of 80,000 new apprenticeship positions, with incentives for employers in industries with skill shortages of up to $8,000 per hire, and a $2,000 payment to the apprentice.

Given the timing of the budget being within 6 weeks of a likely election (date to be confirmed by the Prime Minister shortly), all changes to tax measures announced will not be passed until after the election. This essentially means that all proposed changes are subject to the government being re-elected and the proposed measures then being passed by the two levels of Government.The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at www.ministers.treasury.gov.au. 

Personal Income Tax Rates 

From the 2023 financial year, the upper threshold of the 19% tax bracket will be increased from $37,000 to $45,000. There had been proposals to increase this to $41,000 in previous budgets so these will change previous proposals.

Similarly, the upper threshold for the 32.5% personal tax bracket will be increased from $90,000 to $120,000 from 2023 as well.

From the 2025 year, the 32.5% tax bracket will reduce to 30% and the tax bracket will increase from $120,000 to $200,000 – abolishing the 37% tax bracket completely.

 

Rate Current (2018 - 2022) Proposed (2023 - 2024)
0% 0 - $18,200 0 - $18,200
19% $18,201 - $37,000 $18,201 - $45,000
32.5% $37,001 - $90,000 $45,001 - $120,000
37% $90,001 - $180,000 $120,001 - $180,000
45% $180,000+ $180,000+

 

Immediate Relief for Low and Middle Income Earners

The immediate tax savings will be delivered in the way of further non-refundable tax offset – similar to the current Low-Income Tax Offset of $445 available now.

This will deliver a full $1,080 tax offset to taxpayers with taxable incomes between $48,000 and $90,000, with that amount reducing for those taxpayers below $48,000 and those between $90,000 and $126,000 where the tax offset will reduce to Nil.


LMITO (current) LMITO (proposed)
$0 - $37,000 Up to $200 $0 - $37,000 Up to $255
 $37.001 - 48,000  $200 + 3% of excess over $37,000  $37,001 - $48,000  $255 +7.5% of excess over $37,000
$48,001 - $90,000 $530 $48,001 - $90,000 $1,080
$90,001 - $125,333 $530 - 1.5%of excess over $90,000 $90,001 - $126,000 $1,080 -3% of excess over $90,000
$125334 + NIl $126,001+ NIl


Other Personal Tax Measures
  • The low-income Medicare Levy threshold will be increased from $21,980 to $22,398, and family threshold from $37,089 to $37,794.

 Income Tax – Businesses

  • The $20,000 instant asset write-off has been expanded for a second time and will be extended from just small businesses (turnover less than $10M) to medium businesses as well.
  • The government had already proposed that the instant asset write-off be increased from $20,000 to $25,000 on an asset by asset basis. In addition, this budget will increase that again to $30,000, and apply to all businesses with a turnover of up to $50M. This means that small businesses can claim instant asset write-offs for items up to $20,000 up until 28/1/2019, then up to $25,000 from 29/1/2019 to 2/4/2019 and then up to $30,000 from Budget night - 2/4/2019 until 30/6/2020 – extended for another year. Medium Businesses with turnover between $10M and $50M will also have access to this concession for the first time from 2/4/2019 until 30/6/2020.
  • Amendments to Div 7A that will strengthen the unpaid present entitlements (UPE) rules has been delayed for another year and will commence from 1 July 2020.  

Superannuation

  • The super contributions wok test for 65 and 66 year old’s will be removed, meaning super fund members will be able to make both concessional and non-concessional contributions from 1/7/2020 without needing to meet the work test. The age limit for making spouse contributions has also been increased from 69 to 74.

Black Economy Changes/Taskforce

  • The Government will strengthen the Australian Business Number (ABN) system by imposing new compliance obligations for ABN holders to retain their ABN. 

 

Don't hesitate to call or office if you have any questions about how the recent Budget might affect you


 



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