Well, it's finally out – the 2019 Federal Budget and we've summarised the main financial points that will be relevant for you below. There are benefits for almost all taxpayers, some for small business and also some for retirees:
With effect from 1 July 2019 / Immediate Effect:
The maximum amount of the low and middle-income tax offset will increase from $530 to $1,080 annually for people earning between $48,000 and $90,000 and the base also increases from $200 to $255. The offset then gradually reduces to zero at a taxable income of $126,000. The offset will be available for the 2018-19, 2019-20, 2020-21 and 2021-22 income years. The LMITO will be received after individuals lodge their 2018/19 tax returns and will continue to be provided in addition to the LITO.
The Government is increasing the instant asset write-off threshold from $25,000 ($20,000 up to 28 January, 2019) to $30,000 per asset until 30 June, 2020. The increased threshold and expanded eligibility will apply to eligible assets that are first used, or installed ready for use, from 7.30pm (AEDT) on 2 April 2019 to 30 June 2020.
Medium sized businesses do not have access to the small business pooling rules and will instead continue to depreciate assets costing $30,000 or more (which cannot be immediately deducted) in accordance with the existing depreciating asset provisions in the tax law i.e. Table A and Table B. Eligibility for the scheme has been expanded from small businesses (up to $10 million in annual turnover) to medium-sized ones (up to $50 million).
1. The company tax rate for small and medium-sized companies with an annual turnover of less than $50 million has been lowered to 27.5 per cent. This rate will be lowered further to 25 per cent by 2021-22. In addition to existing incentives for Identified Skills Shortages, employers will be eligible for a $4,000 incentive payment totalling up to $8,000. Apprentices will be eligible for $2,000, paid at key milestones in the apprenticeship.
2. An income tax exemption will be provided for qualifying grants made to primary producers, small businesses and non-profit organisations affected by the North Queensland floods.
3. Payments to primary producers in the Fassifern Valley, Queensland affected by storm damage in October 2018 will be treated as exempt income.
4. There will be a one-off Energy Assistance Payment (Income Tax Exempt) of $75 for singles and $62.50 for each member of a couple eligible for qualifying payments on 2 April 2019 and who are resident in Australia.
5. The Medicare levy low-income thresholds for singles, families, seniors and pensioners will be increased from the 2018/19 income year.
6. The start date of amendments to Div 7A will be delayed by 12 months to 1 July 2020.
7. 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.
8. From 1 July 2019, net income generated from the forced sale of livestock will be exempted from the Farm Household Allowance payment assessment, when that income is invested into a farm management deposit.
With effect from later years:
1. The calculation of exempt current pension income will be simplified for superannuation funds from 1 July 2020, allowing a preferred method of calculation and removal of some actuarial certificates.
2. From 1 July 2020, Australians aged under 67 years will be able to make voluntary contributions without meeting the work test and other age-based rules will be streamlined. The changes to the contribution rules apply to both concessional and non-concessional contributions. The extension of this rule by two years may mean an individual who is 66 at the beginning of 1 July 2020 would be eligible for bring-forward contributions.
3. The restrictions on claiming the spouse contribution tax offset will be eased from 1 July 2020, giving 70 to 74-year-old spouses eligibility.
4. SuperStream will be expanded from 31 March 2021 to include electronic ATO requests for release of superannuation funds and SMSF rollovers.
5. Australian Business Number (ABN) holders will be required to lodge their income tax return from 1 July 2021 and confirm the accuracy of their details on the Australian Business Register annually from 1 July 2022 to retain their ABN status.
6. In 2022-23, the Government will preserve the tax relief provided by the larger low and middle-income tax offset by increasing the top threshold of the 19 per cent tax bracket from $41,000 to $45,000 and increasing the low-income tax offset from $645 to $700.
7. There are tax cuts for middle and high-income earners from 2024 by flattening brackets so those earning between $45,000 and $200,000 all paid a marginal rate of 30%, down from 32.5%. From 1 July 2024, the 37% bracket will also be abolished.
If you have any questions about these budget changes and how they may relate to your situation, please do not hesitate to contact us on 5482 2855.