The 2019-20 Federal Budget was delivered on 2 April 2019 by Treasurer Josh Frydenberg.
This is a month earlier than usual given it’s an election year, and the Government’s wish to hand down the Federal Budget before the next election (predicted to take place in May).
Through this lens, there have been many unofficial catchphrases making the rounds with regards to the Federal Budget such as Pre-Election Budget, Back in Black, Budgeting for a Miracle, and Pre-Poll Cash Splash.
This being said, the Federal Budget is being officially referred to by the Government as a ‘Stronger Economy, Better Future for Australians’.
Budget Overview
Budget Priorities
The Federal Budget priorities, and subsequent proposed measures, primarily focus on delivering in the following areas:
Below is an overview of some of the proposed measures that may be relevant to you and your personal finances.
Fiscal Outlook
Budget Surplus
Based on forward estimates and medium-term projections, the budget is forecasted for a:
*According to the 2019-20 Federal Budget papers, “the temporary fall in 2022-23 reflects timing impacts associated with the legislated Personal Income Tax Plan and additional tax relief in this Budget.”
Taxation
Immediate Relief to Low- and Middle-Income Earners
The non-refundable low and middle income tax offset (LMITO) will increase from a maximum amount of $530 to $1,080 per annum, and the base amount will increase from $200 to $255 per annum for the 2018-19, 2019-20, 2020-21 and 2021-22 financial years.
This is what it will look like for taxpayers with the following taxable incomes:
Locking in the Benefits of Lower Taxes
From 1 July 2022:
Importantly, taken together, these changes will make up for the removal of the LMITO on 30 June 2022.
Further Structural Changes to the Tax System to Deliver Lower Taxes
From 1 July 2024-25, the 32.5% marginal tax rate will reduce to 30%. Importantly, this proposed measure combined with the already legislated abolition of the 37% marginal tax rate in 2024-25, is projected to see 94% of taxpayers pay a marginal tax rate of 30% or less by 2024-25.
This is what it will look like for taxpayers with the following taxable incomes:
Increasing the Medicare Levy Low-Income Thresholds
From the 2018-19 income year, the Medicare levy low-income thresholds will increase:
*For each dependent child or student, the threshold increases by a further $3,471 (previously $3,406).
Increasing and Expanding Access to the Instant Asset Write-Off for Businesses
From 7:30 PM (AEDT) on 2 April 2019, the instant asset write-off threshold will increase from $25,000 to $30,000 and apply until 30 June 2020*.
Also, medium-sized businesses (with an aggregated annual turnover of $10 million or more, but less than $50 million) will now also have access to the instant asset write-off.
*On 29 January 2019, the Government announced that it would increase the instant asset write-off threshold for small businesses (with an aggregated annual turnover of less than $10 million) from $20,000 to $25,000 and extend the instant asset write-off for an additional 12 months to 30 June 2020. This proposal is not yet law.
Strengthening the Australian Business Number (ABN) System
To disrupt black economy behaviour:
Superannuation
Improving Flexibility for Older Australians
From 1 July 2020:
Reducing Red Tape for Superannuation Funds – Exempt Current Pension Income (ECPI)
From 1 July 2020:
SuperStream Rollover Standard – Self-Managed Superannuation Funds Rollovers
The start date of Self-Managed Superannuation Funds rollovers in SuperStream will be delayed until 31 March 2021 (previously 30 November 2019) to coincide with the expansion of the SuperStream Rollover Standard.
Tax Integrity — Increasing Engagement and On-Time Payment of Tax and Superannuation Liabilities
The Government will provide $42.1 million over four years to the Australian Taxation Office (ATO) to increase activities to recover unpaid tax and superannuation liabilities, with a focus not on small businesses, but rather larger businesses and high wealth individuals.
Social Security
Energy Assistance Payment
The Government will provide $284.4 million over two years from 2018-19 to make a one-off Energy Assistance Payment of $75 for singles and $62.50 for each member of a couple ($125/couple) eligible for qualifying payments on 2 April 2019 and who are resident in Australia.
Please note: Qualifying payments include, for example, the Age Pension, Carer Payment, Disability Support Pension, Parenting Payment Single, and Veterans’ pensions and payments.
Funding for Aged Care Services
The Government will provide:
Other Measures
The Government will provide:
Moving Forward
Whilst there were many other proposed measures contained within the 2019-20 Federal Budget, we have focused predominantly on the ones that may relate to you and your personal finances.
For more information on this year’s Federal Budget and what it may mean for you, please watch:
Please contact us if you wish to discuss any aspect of this year’s Federal Budget or how it may affect you.