The 2019 Federal Budget handed down on Tuesday 2nd April 2019 should be call the “Tax Budget”, as it showers tax payers on two key fronts….
Individuals earning up to $126,000 per year
And Businesses with an annual turnover of less than $50 million.
Personal proposed income tax cuts (excluding Medicare 2%)
From the 2025 income year, the 32.5% marginal tax rate will be further reduced to 30%. This proposal is in addition the already legislated changes for 2025 (increase the upper threshold from the now 32.5% tax bracket from $120,000 to $200,000 and abolish the 37% tax bracket)
Personal Tax cuts include a new non-refundable “Low & Middle Income Tax Offset” LMTO, this will be in addition to the current Low Income Tax Offset.
This offset will apply for 4 years and is set to commence for 2018-2019, this will mean a full tax benefit of $1,080 will flow directly to tax payer with income between $48,000 to $90,000 (lesser amounts pro-rata up to $126,000 pa).
Small to medium Business Tax Cuts
A surge of small to medium business tax-cuts will see the reduction in Company Tax rates to 25% due to commence 2021-2022 and further see’s the instant asset write-off increased to $30,000 (assets acquired after 7.30pm 2nd April 2019)
As this has now received royal assent, small to medium businesses will now be able to claim an immediate write-off for eligible assets costing less than $30,000 first used or installed ready for use from 7.30pm 2nd April 2019 to 30 June 2020.
The previously announced increase to $25,000 will still also apply for eligible assets purchased between 29 January 2019 and up to budget night on 2 April 2019. Prior to this the $20,000 limit is applied. The $10m turnover threshold applies to this period.
To benefit from the changes ensure the eligible assets are $29,999.99 or less (this is net of GST)
Limits purchased prior to 28/1/2019 = Less than $20,000
29/01/2019 to 02/04/2019 = Less than $25,000
02/04/2019 to 30/06/2020 = Less than $30,000
Things That May Affect You from 1 July 2020
From 1st July 2020 voluntary superannuation contributions, for both concessional and non-concessional contributions can be made for those aged 65 and 66 without the need to meet the work test, further those aged 65 and 66 are able to make up to 3 years of non-concessional contributions under the “bring forward rule”.
Individuals up to and including the age of 74 will be able to receive spouse contributions (with those 65 and 66 no longer required to meet the work test).
Red-tape to be reduced to calculate the amount of exempt current pension income from 1st July 2020
Other General Measures
From 1st July 2020 Single Touch Payroll will be expanded to collect data from other Government Agencies such as Centerlink (Social Security).
The Division 7A proposed changes will be deferred another year to 1 July 2020, the changes were initially announced to be implementation on 1st July 2019.
ABN strengthening measures. The Government will strengthen your eligibility to hold and maintain an ABN annually due to be implemented from 1st July 2022.
From 1st July 2021 you will be required to lodge an annual tax return.
Currently, ABN holders are able to retain their ABN regardless of whether they are meeting their income tax lodgement obligations or updating the ABN details.
Increase refunds for eligible “Primary Producers” and Tourism Operators
Further relief will provided to farmers and tourism operators by amending the luxury car tax refund arrangements. This will be implemented as from 1st July 2019 on vehicle acquired from this date and is cap at $10,000.
Eligible farmers and tourism operators can apply for a refund of the luxury car tax paid.
(Eligible 4-wheel or all-wheel drive vehicles).
Authorised by SAR Accounting – data extracted from NTAA, Tax Institute & Government Federal Budget Review.