03 Apr 2019 Budget – What Does it Mean for You?
The Government released a big spending Budget last night. With an election likely to be called shortly and held in May, the Government is using this Budget to woo voters.
It is important to remember that the Budget announcements are only proposals at this stage. Each one must be passed by Parliament before they are legislated. Labor will respond with their Budget reply on Thursday night.
We have summarised some key points below and have also put together a more comprehensive analysis including a focus on what it means for you – click here to access the 6 page report.
The Government has built on their seven year income tax plan that they announced last year with further tax cuts and increased tax offsets.
From 1 July 2018 to 30 June 2022
- Increase the Low and Middle Income Tax Offset from a maximum of $530 to $1,080 ($2,160 for dual income families).
- This continues to be in addition to the Low Income Tax Offset.
From 1 July 2022
- From 1 July 2022 the top threshold for the 19% tax bracket will increase from $41,000 to $45,000.
- The Low Income Tax Offset will be increased from $645 to $700.
1 July 2024
- Removal of the 37% personal income tax bracket
- Reduce the 32.5% marginal tax rate to 30%
Other tax changes
- Medicare levy low income thresholds will be increased by a small amount.
- From Budget night to 30 June 2020 small businesses with a turnover of less than $10 million will be able to continue to immediately write off the cost of assets they purchase for less than $30,000. Medium sized businesses with aggregated annual turnover between $10m and $50m can also utilise this measure.
Effective from 1 July 2020
- People aged 65 and 66 will be able to make voluntary contributions to super without meeting the work test.
- The Bring-forward rule will be extended to people aged under 67 at any time during the financial year. (Remember that access to this will still depend on their total super balance).
- Spouse contributions can be made where the receiving spouse is under age 75 (an increase from age 70). Where the receiving spouse is aged 65 or 66 they no longer need to meet the work test.
- The government will change the rules for SMSF’s who have both accumulation and pension amounts to determine the amount of exempt current pension income.
- Social security pension recipients will receive a one-off Energy Assistance Payment by the end of the current financial year. The payment will be $75 for singles and $125 for couples combined and will exempt from income tax.
- The Government will provide $724.8 million over 5 years from 2018-19 to fund improvements in residential and home care services.
- Effective 1 July 2020 the Government will provide $5.9 billion to extend the Commonwealth Home Support Programme (CHSP) funding arrangements.
- Effective May 2019 aged care residents will no longer have to complete means testing forms if they do not own a home and receive income support such as the Age Pension.
- Increased infrastructure spending
- Provide $606.7 million to relevant government departments and agencies to support the response to the Royal Commission recommendations. $404.8 million will go to ASIC.
If you have any questions or wish to discuss what these proposals mean for you please call us on 02 9633 5530.
This information may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure.