Federal Budget Summary
Federal Budget Summary
Dear clients, family and subscribers,
On 2 April 2019, the Government handed down the 2019-20 Federal Budget. Having returned to a surplus position sooner than expected, the government is now seeking to give back to Australians (and to win the election). Please note these are proposals and are yet to be legislated.
1. Personal Income Tax
Immediate relief for low and middle-income earners
The Low and Middle-Income Tax Offset (LMITO) is a non-refundable tax offset that is intended to benefit low and middle-income taxpayers. Currently, the LMITO applies from the 2019 income year to provide tax relief of up to $530 with a base amount of $200.
The budget announced increases to the LMITO starting in the 2019 income year, providing tax relief of up to $1,080 per year with an increased base amount of $255.
|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|
Changes to personal income tax rates
As outlined in the table below, from 1 July 2022, the Government plans to increase the upper threshold of the 19% personal income tax bracket to $45,000 (increasing the previously announced upper threshold of $41,000).
From the 2025 income year, the 32.5% marginal tax rate will be reduced to 30%. The upper threshold will be raised to $200,000 (increasing the previous upper threshold from $120,000). The outcome is that the 37% rate will no longer exist.
|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|
2. Business Taxpayers
An increase to the instant asset write-off was announced.
If passed the measure will apply from budget night to 30 June 2020.
The threshold for the instant write-off increases from the current $25,000 (effective from 29 January 2019) threshold to $30,000.
Please note: the instant write-off only applies where the value of the asset is below the set threshold (i.e. assets valued at $30,000 and above would not qualify). In addition, it is important to note that some assets are excluded despite their value.
Removing the work test for individuals aged 65 and 66
This change would allow voluntary contributions (both concessional & non-concessional) to be made by individuals aged 65 and 66 without meeting the work test from 1 July 2020.
An individual satisfies the work test in an income year where they are ‘gainfully employed’ on at least a part-time basis during the income year in which the contributions are made. To be gainfully employed a member must work a minimum of 40 hours in any 30 consecutive day period.
Access the ‘bring forward rule’ for individuals aged 65 and 66
This proposal will permit individuals aged 65 and 66 to make up to three years of non-concessional contributions under the bring-forward rule.
Increasing age limit for spouse contributions
Individuals up to and including the age of 74 will now be able to receive spouse contributions which is an increase from age 69.
Insurance on an opt-in basis delayed until 1 October 2019
The government will delay the enforcement of insurance held within superannuation only being offered on an opt-in basis. This measure was introduced to ensure that superannuation account balances are not eroded and applies to both new balances for members under the age of 25 as well as those accounts with balances of $6,000 or less.