2019 Federal Budget Changes – Individuals

Increase the Low and Middle Income Tax Offset from 1 July 2018 for this Current 2019 Financial Year from $530 up to a maximum $1,080 to be received on assessment. To provide an immediate benefit to assist families with financial pressures. The application of the proposed benefit is:

  • Taxpayers with taxable incomes of $37,000 or less will receive a benefit of up to $255.
  • Taxpayers with taxable incomes of $37,001 to $48,000 will receive a benefit of up to $1,080. Increasing at 7.5 cents per dollar after $37,000 of taxable income up to the maximum $1,080.
  • Taxpayers with taxable incomes of $48,001 to $90,000will receive a benefit of up to $1,080.
  • Taxpayers with taxable incomes of $90,001 to $126,000 will receive a pro rata benefit phasing out at 3 cents per dollar.

Protecting Us From Bracket Creep

Increase the upper limit of the 19% tax bracket from $37,000 to $45,000. This is a good proposal but this is proposed to apply from 1 July 2022 being the 2023 Tax Year with 4 years to wait to benefit.

Reduce the 32.5% tax rate to 30% from the 2025 Tax Year together with already legislated changes to increase the upper limit of the (now) 32.5% tax bracket from $120,000 to $200,000 and abolish the 37% tax bracket altogether. This is a great change where taxpayers earning up to $200,000 would pay no more than 30% tax plus medicare levy. This is heading in a very good direction. However, we still have to wait 6 years to benefit.

Merge the Low and Middle Income Tax Offset and the Low Income Tax Offset to form one Low Income Tax Offset from 1 July 2022 with a maximum offset of $700.

2019 Federal Budget Changes – Businesses

The Government has announced that it will increase the instant asset write off from $25,000 to $30,000 from 2 April 2019 to 30 June 2020 for Small Businesses with an aggregated annual turnover of less than $10 million. This will create 3 different thresholds during this 2019 Financial Year for Small Businesses:

  • Less than $20,000 from 1 July 2018 to 28 January 2019.
  • Less than $25,000 from 29 January to 2 April 2019.
  • Less than $30,000 from 2 April to 30 June 2019 and onwards to 30 June 2020.

Capital purchases greater than these limits will continue to be depreciated in the General pool at 15% for the first year and 30% for subsequent years. The pool balance can be deducted if the pool balance at the end of the year is less than $30,000.

For the first time, Medium Size Businesses with a turnover between $10 Million and $50 Million will be able to access the instant access write off from 2 April 2019 to 30 June 2020 for assets costing less than $30,000. As Medium Businesses don’t have access to the small business pooling rules, they must depreciate assets costing more than $30,000 under their normal depreciation rules.

Deferral of Proposed Division 7A Changes to 1 July 2020

Defer the Start Date of the proposed Division 7A changes by one year to commence from 1 July 2020 not 1 July 2019.

Expanding Single Touch Payroll (STP)

Expansion of the data collected by the ATO through Single Touch Payroll (STP) and sharing this data with other Commonwealth Agencies. From 1 July 2020, the Government will simplify and automate the reporting of any employment income for welfare recipients through STP.

Strengthening the Australian Business Number System

The Government will require ABN holders to do the following if they want to keep their ABN active:

  • Lodge their income tax return from 1 July 2021 or
  • Confirm the accuracy of their details on the Australian Business Register annually from 1 July 2022.

2019 Federal Budget Changes – Superannuation

Remove the need to meet the Work Test to make voluntary superannuation contributions of both concessional and non concessional contributions by people aged 65 and 66 years from 1 July 2020.

Access to the Bring Forward Rule for People Aged 65 and 66 Years Old

Increase the Age Limit for Spouse Contributions for People Aged up to and including 74

Streamline the Administrative Requirements from 1 July 2020 of SMSFs when Calculating Exempt Current Pension Income and Remove the Requirement to Obtain an Actuarial Certificate under the Proportionate Method when all the Members are in 100% Pension Phase.

Other Changes

Due to the North Queensland Floods, the Government will provide an income tax exemption for qualifying grants made to primary producers, small businesses and non-profit organisations affected by the North Queensland Floods. The qualifying grants include Category C and D grants provided under the Disaster Recovery Funding Arrangements 2018 and grants provided under the On-Farm Restocking and Replanting Grants Program and the On-Farm Infrastructure Grants Program. The grants will be made non-assessable non-exempt income for tax purposes.

Over two years from the 2019 Financial Year, farmers receiving Farm Household Allowance will be able to exempt income from the forced sale of livestock from the Farm Household Allowance income test when that income is invested in a farm management deposit. This measure is to ensure that these recipients who are destocking, retain access to income support while making long-term financial plans.

The Government will provide $57.5 Million over five years from the 2019 Financial Year for the purpose of providing access to a fast, low cost and independent review mechanism for small businesses in dispute with the ATO.

The Government will provide $1 Billion over four years from the 2020 Financial Year to the ATO to extend the operation of the Tax Avoidance Taskforce and their programs and market coverage. This taskforce undertakes compliance activities targeting high wealth individuals, multinationals, large public and private groups and trusts.

The Government will provide $42.1 Million over four years to the ATO to increase activities to recover unpaid tax and superannuation liabilities from larger businesses and high wealth individuals.