The 2019 Federal Budget has been released with many taxpayer friendly proposals as the Liberal Government seeks re-election in the upcoming Federal Election. Given this election, most of these measures will not be passed and become law unless the Liberal Government is re-elected however with Labor’s tax policies being publicised it is important to consider the Liberals’ proposals as outlined in this Budget.
Here is a summary of the most relevant proposals: –
- The biggest announcement related to the 2019 year and the proposal to increase the low income tax offset from $530 to $1,080. In effect this means that many Australians will receive an immediate tax benefit when they lodge their 2019 tax returns.
- There were also the usual proposals about planned increases to the tax thresholds in future years, the most significant of these being the proposal from 1 July 2024 to reduce the 32.5% tax rate to 30% and abolish the 37% tax bracket altogether. In effect, it proposes that Australians earning between $45,000 and $200,000 will pay tax at a 30% marginal tax rate from 1 July 2024.
- There were the standard proposed measures to increase the Medicare Levy low income thresholds for the 2019 year (from $34,758 to $35,418 for individuals).
- Introduction of new thresholds for the immediate write off of assets for businesses. The asset amount has been increased to $30,000 and this will apply to all businesses with a turnover less than $50 million. So from 2 April 2019 to 30 June 2020 this measure will apply to more assets and more businesses than ever before.
- Finally, with regards to superannuation the Budget not surprisingly was proposing only minor changes after the significant changes introduced in prior years. Most of the proposals are measures to bring pre-existing rules in line with changes that were introduced to increase the age pension age to 67. So from 1 July 2020 the ability to make voluntary personal super contributions without meeting the work test will be raised from 65 to 67 years of age (including the ability to access the three year bring forward rule for non-concessional contributions). Similarly the spouse contribution age limit is increasing to 74 with those aged 65 or 66 not needing to meet a work test.
If you would like further details on the Budget proposals or have any queries, please do not hesitate to contact us.