The Federal Budget - budget or election promise?

 The 2019 Federal budget was rolled out last night with the Treasurer handing down the first budget surplus in 12 years. The budget is once again overshadowed by the Federal Election looming in May. If Bill Shorten and the labour party are to take the seat in government, many of these budget announcements may not be implemented. It is important to remember that the budget is merely a proposal put forth by the government of the day, it is not actually law until these policies get passed by the newly elected party

However, with that being said we now have a look at the budget measures that affect us as individual or business tax payers:

1.       Personal Income Tax – new rates are proposed, but not to take effect until 1 July 2022. So as it stands at the moment tax rates are seeing no change.

 

2.       Low and Middle Income Tax Offset (LMITO)– will mean a reduction in tax for taxpayers.

 

·         Taxable income of $37,000 or less – LMITO of up to $255,

·         Taxable incomes between $37,000-$48,000 – LMITO set will increase at a rate of 7.5c per dollar with maximum offset of $1,080

·         Taxable incomes between $48,001-$90,000 - LMITO of $1,080 is proposed

·         Taxable income of $90,000-$126,000 – LMITO will phase out at a rate of 3c per dollar

A small amount, but we will take whatever we can get, every little bit counts.

3.       Increase in the Medicare levy low-income thresholds – this means a small reduction in the Medicare levy payable.

 

4.       Small Business – the immediate write-off for small business has increased to $30,000 from 7.30pm 2 April 2019 this has increased from the $20,000 in previous years. A proposal of an increase to $25,000 enacted on 29 January 2019, if legislated the measures will be as follows in the table below. The $30,000 instant asset write off also now applies to medium businesses with a turnover of less than $50 million, it has not in the past.

Proposed changes to the instant write-off thresholds

Asset first used or installed ready for use between

Small business (turnover less than $10 Million)

Medium Business (turnover less than $50 Million)

1 July 2018 to 28 January 2019

< $20,000

N/A

29 January 2019 to Budget Night

<$25,000

N/A

Budget night to 30 June 2020

<$30,000

<$30,000

 

 

 

 

 

 

 

 

 

·         Please note:  If you are looking to purchase an asset and take advantage of these measures please contact the office so we can clarify the timing and the write off amount available.

 

·         Reminder of accelerated depreciation rules:

                                                               i.       Immediate deduction for Water Facilities – dams, tanks ,bores, irrigation channels, pumps, water towers and windmills

                                                             ii.      Immediate deduction for Fencing Assets – a repair of a capital nature, addition or extension

                                                            iii.       Immediate deduction for Fodder Storage Assets  – silos and tanks used to store grain and other animal feed first used or installed ready for own use on or after 19 August 2018

 

5.       Luxury car tax refunds – for vehicles acquired on or after 1 July 2019, eligible primary producers will be able to apply for a refund of any luxury car tax paid, up to $10000, was previously $3000.

 

6.       Superannuation

·         Removal of Work Test - from 1 July 2020 people aged 65 and 66 years of age can make voluntary contributions without meeting the work test. Currently people aged 65-74 can voluntarily contribute to super without meeting this test.  Removal of the work test for people aged 65 and 66 enables these taxpayer's to contribute to super and get the concessional tax deduction, which for the 2018 – 19 financial year is $25,000. This is a great initiative for the super space!

·         Bring forward rule – it will allow those aged 65 and 66 to make up three years of non-concessional contributions under the bring forward rule, currently those aged 65 and over cannot access these arrangements

·         Spouse Contributions – currently those aged 70 and over cannot receive spouse contributions. The proposal is that individuals up and including the age of 74 will be able to receive spouse contributions.

 

7.       Rural areas – there is a commitment to major spending in rural areas to expand water infrastructure and provide drought relief.

As always given our rapid changing governments, 'watch this space', the budget proposals can change with a change of government.

 

Some links to some good articles summarising the 2019 Federal Budget -

ATO - https://www.ato.gov.au/General/New-legislation/Latest-news-on-tax-law-and-policy/?fbclid=IwAR21Mv6dmOoWN7IqvO1PqFyvOThxmQoETOcOkLuU8sOgfvWxpBDCSGFrCNs

Grant Thornton - https://www.grantthornton.com.au/globalassets/1.-member-firms/australian-website/mid-size-business/pdfs/gtal_2019_federal-budget-2019-20.pdf

CPA Australia - https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/media/federal-budget-report-2019-20.pdf

ABC - https://www.abc.net.au/news/2019-04-02/federal-budget-2019-winners-and-losers/10939098

NTAA - Budget 2019.pdf