2019/20 Boyce Budget Summary
3 April 2019
On Tuesday 2nd April, the Federal Treasurer, the Hon Josh Frydenberg, handed down the Coalition Government’s national budget for the 2019-20 Financial Year. In the budget the Treasurer announced a return to a budget surplus, with a surplus of $7.1 billion for 2019-20.
The clear focus was to bring the budget back to surplus without increasing taxes. There is no significant taxation reform announced in this budget, but there are a number of mostly minor tweaks to the current system.
There is a theme in this budget to provide for future growth without burdening future Australians to fund these measures while still delivering tax relief.
This is a budget preceding an election, so there are a number of measures within this budget that are designed to improve the Morrison Government’s standing with voters.
Personal Income Tax Plan
The Government will lower taxes for individuals by building on its legislated Personal Income Tax Plan (the plan) from the 2018-19 Budget. The changes to the plan will provide immediate relief to low and middle income earners. It will also introduce structural changes to provide more reward for effort and to maintain our international competiveness.
The Government will provide a further reduction in tax provided through the non-refundable low and middle income tax offset (LMITO). Under the changes, the maximum tax offset will increase from the previously proposed amount of $530 to $1,080 with the base amount increasing from $200 to $255. The LMITO will apply from the 2018-19 year to the 2021-22 year. This measure will benefit individual taxpayers with taxable incomes of up to $126,000.
From 1 July 2022, the Government will:
- increase the top threshold of the 19 per cent personal income tax bracket from $41,000, as legislated under the plan, to $45,000.
- also increase the low income tax offset (LITO) from $645, as legislated under the plan, to $700. This measure will benefit individual taxpayers with taxable incomes of up to $66,667.
From 1 July 2024, the Government will reduce the 32.5 per cent marginal tax rate to 30 per cent. In 2024-25 an entire tax bracket, the 37 per cent tax bracket will be abolished under the Government’s already legislated plan.
Increasing the Medicare levy low-income threshold
For the 2019-20 income year the threshold for singles will be increased from $21,980 to $22,398. The family threshold will be increased from $37,089 to $37,794. For single seniors and pensioners, the threshold will be increased from $34,758 to $35,418. The family threshold for seniors and pensioners will be increased from $48,385 to $49,304. For each dependent child or student, the family income thresholds increase by a further $3,471, instead of the previous amount of $3,406.
Increasing and expanding access to the instant asset write off
The Government is increasing the instant asset write off threshold from $25,000 to $30,000. Small businesses (with aggregated annual turnover of less than $10 million) will be able to immediately deduct purchases of eligible assets, costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.
The previous $20,000 immediate asset write off will apply to 29 January 2019. Between 29 January 2019 and 2 April 2019 the proposed threshold increase of $25,000 will apply, with the $30,000 threshold to apply from 7.30PM (AEDT) 2 April 2019.
Medium sized businesses (with aggregated annual turnover of $10 million or more, but less than $50 million) will also be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.
Increasing the age for making super contributions without needing to pass the work test
From July 1 2020, Australians aged 65 and 66 will be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the work test. Currently, the work test applies to Australians aged 65 or over.
This will align the work test with the eligibility age for the Age Pension, which is scheduled to reach 67 from 1 July 2023.
Increasing age limit for the bring-forward contributions
The Government will also extend access to the bring-forward arrangements, which currently allow those aged less than 65 years to make three years’ worth of non-concessional contributions, which are capped at $100,000 a year, to their super in a single year. This will now be extended to those aged 65 and 66 who meet the conditions for accessing the bring-forward contribution cap.
Increasing age limit for spouse contributions
The Government will increase the age limit for spouse contributions from 69 to 74 years. Currently, those aged 70 years and over cannot receive contributions made by another person on their behalf.
General Tax related measures
Strengthening the Australian Business Number system
The Government will strengthen the Australian Business Number (ABN) system to disrupt black economy behaviour by requiring ABN holders:
- from 1 July 2021, with an income tax return obligation, to lodge their income tax return; and
- from 1 July 2022, to confirm the accuracy of their details on the Australian Business Register annually.
The new conditions will make ABN holders more accountable for meeting their government obligations, while minimising the regulatory impact on businesses doing the right thing.
Luxury Car Tax — increased refunds for eligible primary producers and tourism operators
The Government will provide further relief to farmers and tourism operators by amending the luxury car tax refund arrangements. For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000.
Currently, primary producers and tourism operators may be eligible for a partial refund of the luxury car tax paid on eligible four wheel or all-wheel drive cars, up to a maximum refund of $3,000.
Tax Integrity — further consultation on amendments to Division 7A
The Government will defer the start date of the 2018-19 Budget measure, Tax Integrity — clarifying the operation of the Division 7A integrity rule, from 1 July 2019 to 1 July 2020.
Measures to assist Queensland taxpayers affected by natural disaster
The Government will provide an income tax exemption for qualifying grants made to primary producers, small business and non-profit organisations affected by the North Queensland floods.
The Government will also provide an income tax exemption for qualifying grants provided through the Foundation for Rural and Regional Renewal to eligible primary producers in the Fassifern Valley, Queensland affected by storm damage in October 2018.
Non Tax related measures
Emergency Response Fund
The Government will review it's Fund arrangements to establish the Emergency Response Fund from 1 October 2019, to fund natural disaster recovery and response initiatives above and beyond existing state and federal programs.
North Queensland Flood Recovery Package
The Government will provide $3.1 billion over five years from 2018-19 to support North Queensland’s livestock industry and associated communities to recover from the impacts of the 2019 flood event.
Concessional Treatment for the Forced Sale of Livestock under the Farm Household Allowance Program
The Government will exempt net income generated from the forced sale of livestock from Farm Household Allowance (FHA) payment assessment, when that income is invested into a Farm Management Deposit. This measure will ensure that FHA recipients who are destocking retain access to income support and are able to make long term financial plans for their future.
Energy Assistance Payment
The Government will provide a one-off Energy Assistance Payment of $75 for singles or $62.50 for each member of a couple who are eligible social security payment recipients.
For more information, visit www.budget.gov.au or if you have specific questions about how the 2019-20 budget may impact you or your business, please speak with your local Boyce accountant.