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2019 Federal Budget Summary

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.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.