The main superannuation and tax measures proposed within the 2019 budget are listed below. It must be noted however that the following announcements will need to be legislated in order to be implemented.
- Changes to personal income tax rates
From 1 July 2022, the government is proposing to increase the personal income tax rates as follows:
- Relief for low and middle income earners
The government has announced the Low and middle income tax offset (LMITO) will increase and provide tax relief via a non refundable tax offset of up to $1,080 per annum. The tax offset is proposed to cease following the 2022 financial year.
- Increasing the Medicare Levy Low-income thresholds
The Medicare Levy low-income threshold will increase for singles, families and seniors for the 2019 financial year. This increase is standard each year based on CPI. For a single earning under $22,398, no Medicare levy will be charged.
- Increasing the access to the instant asset write-off
The government has proposed that the current instant asset threshold will increase to $30,000. The threshold applies on a per asset basis and allows for small and medium sized businesses (turnover under $50 million) to immediately deduct purchases of eligible assets costing less than $30,000.
- Proposed Division 7A changes deferred
The government had previously announced targeted amendments to Division 7A (detailed in Luke Bland’s blog) to ensure the integrity of the legislation. This change has now been deferred to 1 July 2020.
- Single Touch Payroll expansion
The government has announced further data will be collected via Single Touch Payroll and will be shared with Commonwealth agencies. From 1 July 2020, the government will automate reporting of employment income to Human Services using Single Touch Payroll. More information on Single Touch Payroll will be highlighted in one of our blogs in May 2019.
- New Australian Business Number (ABN) requirements
It is proposed that all ABN holders will be required to meet their income tax return lodgement obligations from 1 July 2021 and confirm the accuracy of their details on the ABN register annual from 1 July 2022 in order to remain an eligible ABN holder.
- Removing the work test for those aged 65 and 66 years
Currently individuals over the age of 65 years are unable to make voluntary contributions to superannuation unless they meet the work test. The work test requires individual to work 40 hours in 30 consecutive days in order to pass. From 1 July 2020, It is proposed this will now apply from the age of 67 and individuals aged 65 and 66 will not need to pass the requirement.
- Access to the ‘Bring-forward rule’ for those aged 65 and 66 years
The cut off of the ability to make three years of non-concessional contributions under the bring-forward rule has been raised from 65 years to 67 years.
- Increasing the age limit for spouse contributions.
- Insurance on an opt-in basis for individuals under 25 year or with member balances under $6,000 will be delayed to 1 October 2019.
- Refunds of luxury car tax paid for primary producers and tourism operators up to $10,000.
- Income tax exemptions for qualifying North Queensland flood grants.
- Payments distributed to the Fassifern Valley following storm damage will be exempt income for tax purposes.
- Concessional treatment for the forced sale of livestock under the Farm household allowance program.
Overall, the 2019 budget was not too surprising. With the up-coming federal election, it was very much a conservative budget of a government who already has a slim chance of winning. With the election likely coming in the next six weeks, who knows which of the above changes will pass but at least the above should set a precedent. Surely no entering government is going to want to be shown as giving us less than the previous government promised. I guess this scene is to be continued…
To ensure you have your tax and superannuation set up to account for the changes in the Federal Budget, or in preparation for the upcoming election, get in touch with our team from BLG Business Advisers online or by calling (02) 4229 2211.