Treasurer Josh Frydenberg’s first Budget focuses on reducing the tax burden for the majority of working Australians, greater superannuation flexibility for retirees and a one off energy relief payment for eligible income support recipients.
Personal tax savings
Immediate tax relief
Low and middle income earners will receive a tax saving of up to $1,080 per person. This can be claimed in the 2018/19 tax return.
Preservation of tax relief for low and middle income earners
From 1 July 2022, the 19 per cent tax bracket will increase from $41,000 to $45,000, with an increase in the low income tax offset from $645 to $700.
Reduction in key marginal tax rate
From 1 July 2024, the current 32.5 per cent marginal tax rate will drop to 30 per cent for income between $45,000 and $200,000.
Minimisation of bracket creep
The Government estimates that from 1 July 2024, 94 per cent of taxpayers will have a marginal tax rate of no more than 30 per cent.
Source: MLC 2019 Federal Budget Analysis, 2 April 2019
Source: MLC 2019 Federal Budget Analysis, 2 April 2019
Superannuation changes
From 1 July 2020
Changes to voluntary super contributions
Australians aged 65 and 66 will be able to make voluntary super contributions without meeting the Work Test – removing the need for people of this age to work a minimum 40 hours over a 30 day period.
Increasing age limit for spouse contributions
The age limit for people to receive contributions made by their spouse on their behalf increases from 69 to 74 years.
Extended access to bring-forward arrangements
People aged 66 and under will now be able to make three years’ worth of non-concessional contributions to their super in a single year, capped at $100,000 a year.
Small to medium business
Increase in instant asset write-off
From Budget Night
The threshold for the instant asset write-off increases to $30,000 from $20,000. It has also been broadened to include businesses with up to $50 million in turnover, making it available to around 3.4 million Australian businesses.
Pensioners and welfare recipients
Energy Assistance Payment
From June 2019
Over 3.9 million eligible Australians will automatically receive a one-off payment of $75 for singles and $125 for couples (combined) to assist with their energy bills. This payment will be exempt from income tax and not counted as income for social security purposes.
Aged Care
Date of effect: 1 July 2018
More funding will be available to improve the quality, safety and accessibility of residential and home care services, including:
* The release of an additional 10,000 home care packages across the four package levels, and
* Developing an end-to-end compliance framework for the Home Care program, including increasing auditing and monitoring of home care providers.
Final Word
It is important to note that legislation is required to pass to support these measures. As a Federal election is likely to be called shortly and there are limited sitting days in Parliament, it is reasonable to expect that some measures may not be legislated.
Labor’s budget reply will be made on Thursday 4 April, and this will be watched with greater interest than usual with the impending election.
As always, please don’t hesitate to get in touch if you have any queries or concerns regarding these proposals.
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