With the Coalition returning to Government, and a likely ability to govern in its own right, with at least 76 seats expected to be won, the 2019 Federal Budget is once again a focus.
Prime Minister Scott Morrison has already confirmed to media he expects to pass the Budget in its entirety (The Australian, 20.05.19). A summary of some key points likely to affect our clients are listed below.
- Immediate tax relief for low- and middle‑income earners of up to $1,080 for singles or up to $2,160 for dual income families to ease the cost of living.
- Lowering the 32.5 per cent rate to 30 per cent in 2024-25, increasing the reward for effort by ensuring a projected 94 per cent of taxpayers will face a marginal tax rate of no more than 30 per cent.
SMALL BUSINESS TAX
- The $20,000 instant write-off for small businesses with a turnover of up to $10 million was recently increased to $25,000. The Government has announced a further increase in instant write-off of assets to $30,000 until 30 June 2020; and expanded access to medium-sized businesses with an annual turnover of up to $50 million.
- The Government remains committed to legislating lower tax rates for small and medium-sized businesses with turnovers below $50 million. Small and medium-sized companies currently facing a 27.5% rate will have a 25% rate by 2021-22, which is five years earlier than previously planned.
- Spouse contribution age limit - The maximum age at which a spouse contribution can be made will be increased from age 69 to age 74. The limit applies to the age of the spouse into whose super account the spouse contribution is being made. This measure is proposed to commence from 1 July 2020.
- Non-concessional (NCC) bring forward - The age restriction for the bring-forward of up to two years of the NCCs will be extended by two years. Age will be extended to allow those aged 65 and 66 to use the bring-forward arrangement. This measure is proposed to commence from 1 July 2020.
- Reducing red tape for superannuation funds — ECPI changes - The Government will allow superannuation fund trustees with interests in both the accumulation and retirement phases during an income year to choose their preferred method of calculating exempt current pension income (ECPI). This measure is proposed to commence from 1 July 2020.
- The 40-hour work test is to be scrapped for those aged 65 and 66 years who make voluntary contributions – concessional and/or non-concessional - to superannuation.
The government introduced a new $500 million First Home Loan Deposit Scheme for first homebuyers to help them get a foot in the door. This will give 10,000 first homebuyers the opportunity to buy a home with only a five per cent deposit, as opposed the usual 20 per cent.
Recommended no changes to the current negative gearing framework.