Please find here our 2019 Federal Budget Update. The Government has projected a 2019/20 surplus of $7.1billion and a reduction in the nation’s debt to zero by 2029/30. Clearly, staged tax cuts are the cornerstone of this pre-election Budget, in an attempt to stimulate spending.
Closer to home, the 2019 Budget does not include significant changes for our client stakeholders with some of the key impacts outlined below:
- A staged reduction (over six years) of the marginal tax rate from 32.5% to 30.0% (incomes between $45,001-$200,000) which will more closely align with the corporate tax rate. Overall, the Government projects that by 2024/25, 94% of taxpayers will face a tax bracket of 30% or less.
- An increase in the immediate asset write-off to $30,000 for businesses that have turnover of less than $50million.
- An increase in the Low & Middle Income Tax Offset (LMITO) for individual taxpayers to $1,080 ($2,160 for dual income families) along with a modest increase in the Low Income Tax Offset (LITO).
- Extending the ability for retirees to contribute to superannuation at ages 65-66 (previously, a work test would need to have been firstly met). This measure applies to both Concessional and Non-Concessional contributions, together with an extension of the 3-year bring forward rule to retirees who are aged 65-66. (effective from 1 July 2020)
As the Government is firmly in election mode, it is not beyond possibility that additional announcements are made in coming weeks, along with both the formal Budget response and counter offers by opposition parties, particularly the Labor party.
Clearly, the ability to swiftly legislate any proposals contained within this Budget is limited. It is likely to be a very short Parliamentary session with the imminent Federal election. Additionally, the Parliament currently has a significant number of tax and related Bills covering important measures that at present have not been legislated, together with volumes of draft legislation and consultations. Effectively, specific measures included in this Budget, at least in part, could simply add to the substantial amount of unfinished business as the Parliamentary caretaker mode kicks in.
Please do not hesitate to contact Allan, David or Matthew should you have any immediate queries in relation to the impact of the proposed Budget changes on your personal circumstances.