Updated: Aug 5, 2019
As you are aware the budget was released this week and has divided opinions, with some claiming it is an attempt by the Liberals to “buy votes” and others declaring it a boon for low income earners and the economy overall.
Whilst the budget will have a wide-ranging impact, here are some of the key points –
· Tax Breaks - there will be immediate tax breaks for low-to-middle income earners and future tax cuts for higher earners. ABC News have a great interactive tool which can calculate your potential tax break – click here
· The Medicare Levy will be retained at 2% - the Medicare Levy was due to increase to 2.5% from 1 July 2019, but will now remain at 2%.
· Superannuation work test exemption for retirees – from 1 July 2019 the Government intends to allow people aged 65 to 74 with a super balance under $300,000 to make voluntary contributions for 12 months from the end of the financial year they last satisfied the work test. This means that retirees and people who work past age 65 to continue to boost their superannuation savings.
· SMSF membership increasing to six – the rules governing SMSFs will be amended to allow for six members in a fund, instead of the current four. This will mean that larger families will be able to combine their superannuation into a single fund structure.
· Three year audit cycle for SMSFs – the Government will allow some SMSFs to move from an annual review to a three-yearly review. This will only apply to funds with three or more years of clear audit reports and where the annual return for the fund was lodged in a timely manner.
· Changes to insurance in super – where a member has a balance less than $6,000, is under the age of 25 or whose account has not received a contribution in 13 months (inactive) will have their insurance moved from a default basis to an opt-in basis. This means a member who fits this description will have to elect to maintain insurance, to prevent default insurance cover offered by some funds from eroding the balance without the members knowledge.
· Changes to superannuation fees – from 1 July 2019 there will be a 3% cap imposed on passive fees for superannuation funds where the member has a balance below $6,000, and ban all exit fees on superannuation accounts.
There are many other changes suggested in the budget, and you can view a list of the changes here.
It’s important to note that although the Federal Budget generates quite a media frenzy, most of the major changes announced are only proposed changes ad will not come into effect until passed by both Houses of Parliament.
If you have questions about any of the proposed changes, please don’t hesitate to call the office on 1300 707 955 or email email@example.com.