The 2019 Federal Budget
The 2019 Federal Budget was announced by the Treasurer on 2 April 2019. Reducing the tax obligations of many working Australians, as well as increasing superannuation flexibility for older Australians was the focus of this year’s Budget.
Although the Government had hoped the 2018/19 Budget would scrape through in surplus, they have instead projected that this year’s Budget will deliver a $7.1 billion surplus in 2020.
We have summarised the major proposals we believe will be of interest to you. It is important to note these changes have not yet been legislated and will need to pass through Parliament. It being an election year, the likelihood of these proposals becoming law will also depend on the structure of Parliament following the election in May.
Tax bonuses for low- and middle-income earners
- For the 2018/19 financial year, those earning between $48,000 and $90,000 will be eligible to receive a maximum tax offset of $1,080 (an increase from $530). For those who earn between $90,000 and $126,000, this offset will phase out at a rate of three cents per dollar. The base amount, for those earning less than $37,000, will increase from $200 to $255.
- From 1 July 2022, the 19 per cent tax threshold will be extended from $41,000 to $45,000. The Low Income Tax Offset will also be increased from $645 to $700 per year.
- From 1 July 2024, the 32.5 per cent tax rate will be reduced to 30 per cent, and the threshold increased to $200,000. The 37 per cent tax rate will be removed.
Changes to super contribution rules for those over 65
- Those aged 65 and 66 will be able to make voluntary super contributions without meeting the contributions work test. They will also be able to make use of the bring-forward rule, allowing them to contribute up to $300,000 in one financial year.
- The age limit for spouse contributions will be increased to 74.
These rules will apply from 1 July 2020.
Energy Assistance Payment
- The Government will provide a one-off payment of $75 for singles and $125 for couples who receive qualifying income support.
- The Medicare levy low-income thresholds will be increased for singles, families, seniors and pensioners from the 2018-19 financial year. This will account for recent increases in the CPI.
Increased access to Aged Care
- More funding will be provided to improve the quality, safety and accessibility of Aged Care services and increase the availability of home care packages.
If the above proposals could impact your current strategy, please call your Intrust360° financial adviser on 1300 001 360 for assistance.