2019 Federal Budget Summary
Intro
There are a number of changes to taxation this year.
This includes a reduction in personal taxation rates, increased availability and amount of tax offsets, and an extension and broadening of the instant asset write off regime available to some businesses. Please read on to get a summary of highlights from this year’s federal budget.
Personal Taxation
Tax offset-changes (From 1 July 2018)
Low and middle-income earner tax offset
There has been a proposed increase to the amount of LMITO available, and the availability of the offset has been extended to additional Australians who previously weren’t eligible.
Increase to tax offset
| Low and Middle Income Tax Offset | ||
| Maximum offset amount | Shade-out income | Increase or decrease |
| $255 | $0 – $37,000 | N/A – entitled to maximum |
| $1,080 | $37,000 – $48,000 | Increase $0.075 per $1 |
| $1,080 | $48,000 – $90,000 | N/A – entitled to maximum |
| $1,080 | $90,000 – $126,000 | Reduction $0.03 per $1 |
Personal Tax Rate Changes
From 1 July 2024, 32.5% tax bracket will be reduced to 30%
Estimated that by 24/25 financial year, 94% of Australian’s will pay tax at 30% or less.
| Personal tax rates and thresholds | |||||
| Tax rate (excluding Medicare) |
Income thresholds |
Proposed from 1/7/2024 |
Proposed income thresholds from 1/7/2024 |
||
| Current for 2018/19 |
Proposed for 2018/19 to 2021/22 |
Proposed from 2022/23 to 2023/24 |
|||
| 0% | $0 – $18,200 | $0 – $18,200 | $0 – $18,200 | 0% | $0 – $18,200 |
| 19% | $18,201 – $37,000 | $18,201 – $37,000 | $18,201 – $45,000 | 19% | $18,201 – $45,000 |
| 32.5% | $37,001 – $90,000 | $37,001 – $90,000 | $45,001 – $120,000 | 30% | $45,001 – $200,000 |
| 37% | $90,001 – $180,000 | $90,001 – $180,000 | $120,001 – $180,000 | Not applicable | Not applicable |
| 45% | > $180,000 | > $180,000 | > $180,000 | 45% | > $200,000 |
| Low and middle income tax offset | Up to $530 | Up to $1,080 | Nil | Low and middle income tax offset | Nil |
| Low income tax offset | Up to $445 | Up to $445 | Up to $700 | Low income tax offset | Up to $700 |
Taxation – Small & Medium Business
Extension of instant write-off (Applies from Budget Night)
Currently, small businesses with an annual turnover of $10 million or less are able to claim an immediate deduction for eligible assets costing less than $20,000 each. It was previously announced earlier in the year that the Government intended to increase this threshold further to $25,000. From Budget night, the threshold is proposed to increase further to $30,000.
In addition, this deduction will now be available to medium sized businesses, with annual aggregated turnover of <$50m.
This measure will be extended for a further 12 months, until 30 June 2020.
Superannuation
Work Test – Contributions Increased to 67 (From 1 July 2020)
From 1 July 2020, Australians aged under 67 years will be able to make voluntary contributions without meeting the work test and other age-based rules will be streamlined. The changes to the contribution rules apply to both concessional and non-concessional contributions.
The extension of this rule by two years may mean an individual who is 66 at the beginning of 1 July 2020 would be eligible for bring-forward contributions.
The current rule applies to Australians aged under 65 years.
Opportunities
Superannuation
- Super continues to be attractive for retirement savings
- New contribution opportunities
- Revisit your super retirement projections
Taxation
- Individual taxation cuts and increase in offset
- Cashflow boost: consider investment opportunities and debt management
- Small and medium business: seek taxation advice
Social Security
- Relatively minor changes for most
- Energy Assistance Payment
- Increased funding for home care and residential aged care
How does this impact me?
Changes to the Federal Budget will impact individuals and businesses in different ways. If you’d like to understand how the changes will affect you and/or your business, get in touch with us to see how you can maximise new or improved opportunities available to you.
Note:
It is important to understand that the measures announced in the Budget are proposals only and will not become law until legislation is passed.
Check out another recent blog in this category.
Organise a meeting with us to discuss what opportunities are available to you.
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