2019 Federal Budget: What it means for you

2019 Federal Budget: What it means for you

This year’s election budget delivering sweeteners as expected with a budget surplus, the focus was predominantly on reducing tax rates for individual tax payers. 

Given that the federal elections could change the mood and there is no certainty that these announcements will ever get legislated. We ask the readers to consider these announcements only.

INDIVIDUAL TAX

Tax cuts were the headline act of this year’s “back in black” (a forecast return to surplus) bonanza.

The government has announced immediate tax relief for low- and middle-income earners (earning from $48,000 to $90,000) of up to $1,080 for singles or up to $2,160 for dual income families to ease the cost of living.

If the Coalition Government is re-elected, then this means immediate cash back to individuals in July 2019 when they lodge their tax returns.

The Coalition will also be lowering the 32.5 per cent rate to 30 per cent in 2024-25, increasing the reward for effort by ensuring a projected 94 per cent of taxpayers will face a marginal tax rate of no more than 30 per cent.

INSTANT ASSET WRITE OFF

Smaller businesses (income under $10 million) will be able to immediately deduct purchases of eligible assets costing less than $30,000 from budget night 2 April 2019 up until 30 June 2020. This has increase from the previous amount of $25,000, which if legalisation is passed, will approve a deduction of up to $25,000 from 29 January 2019 to 2 April 2019.

Medium sized businesses (income from $10 million to $50 million) will also be able to immediately deduct purchases of eligible assets costing less than $30,000 from budget night 2 April 2019 to 30 June 2020.

SUPERANNUATION

Fortunately, super hasn’t been tinkered with too much this time.

The government will allow voluntary superannuation contributions (both concessional and non-concessional) to be made by those aged 65 and 66 without meeting the work test from 1 July 2020. People aged 65 and 66 will also be able to make up to three years of non-concessional contributions under the bring-forward rule.

Those up to and including age 74 will be able to receive spouse contributions, with those 65 and 66 no longer needing to meet a work test.

MEDICARE LEVY CHANGES

While the Medicare levy remains unchanged at 2% of taxable income, there has been a change in threshold for low-income singles, families and seniors and pensioners will increase from 2018/19 year.

Singles – 22,398

Family Threshold – 37,794 plus $3,471 for each dependent child or student.

SOCIAL SECURITY

Qualifying income support payment will receive a one-off Energy Support Assistance Payments of $75 for singles and $125 for couples to assist with energy bills.

These payments will include Age Pension, Disability Support Pension, Parenting Payment Single, Veterans’ Service Pension, Veterans’ Income Support Supplement, Veterans’ disability payments, War widow Pension and permeant impairment payments under the Military Rehabilitation and Compensation Act 2004.

AGE CARE

The Government has allocated $320 million for a one-off increase to the basic care subsidy for aged care residents
Furthermore, there will be 10,000 extra home care packages in the next five years.

ATO COMPLIANCE ACTIVITY

With today’s technology and data matching ability by the ATO, the ATO is have had very high success on collecting tax deficits from their targeted audit activity. The Government has announced increased funding to various ATO taskforces. Client need to be aware of the ever-increasing information the ATO is using to cross-check information disclosed income tax returns lodged.

LET’S CATCH UP OVER THE FINANCIAL YEAR ENDING MEETING

The above is only a general summary of how 2019 Budget may affect you. If you haven’t met with us yet, now is the time to arrange an End of Financial Year meeting, so we can help you limit your tax payments, discuss your goals and plans for the next year, and grow your wealth. Remember, we both need time to implement any appropriate tax savings strategies for you well before 30 June 2019.