The 2019 Federal Budget contained plenty of items that will potentially affect your hip pocket. I say “potentially”, because we’re heading for an election in the next few months and if Labor wins, some of the measures outlined in the Budget may never see the light of day.
But let’s analyse the key announcements in the Budget anyway, especially the ones that could affect you immediately. You can also read about Labor’s key tax policies and how they could potentially affect you in the future here.
Individual income tax
An immediate increase in the low-and-middle-income tax offset.
If you earn between $48,000 and $90,000 per year, you’ll be eligible for a tax offset of $1,080 from this financial year and for the next three years. This offset was previously only $530.
The government estimates that 4.5 million working Australians will receive the full amount of the low-and middle-income tax offset, and a further 6 million people will be entitled to a partial offset.
Longer-term changes to Australia’s marginal tax rates.
The government plans to increase the top threshold for the 19 per cent tax bracket from $41,000 to $45,000 from the 2022/23 financial year.
In addition, the government intends to reduce the 32.5% tax bracket (for people earning $45,000 to $200,000 per year) will be reduced to 30% from the 2024/25 financial year.
An immediate increase in the instant asset write-off.
Small-to-medium sized businesses with an annual turnover of up to $50 million will be able to write-off assets purchased up to the value of $30,000 for the 2018/19 financial year and beyond.
Previously, only small businesses with a turnover of up to $10 million were eligible for a maximum instant asset write-off of $25,000.
Longer-term changes to small business tax rates.
The government plans to reduce the small-to-medium-sized business tax rate from 27.5% to 25% for the 2021/22 financial year and beyond.
Energy Assistance Payment
The government announced a one-off income tax exempt payment of $75 for singles and $125 for couples to assist with “power bills and cost of living pressure”.
This payment will be made to recipients of the Age Pension, Disability Support Pension, Carer’s Payment, Parenting Payment Single, Veterans’ Service Payment, Veterans’ Income Support Supplement, Veterans’ Disability Payments, War Widow(er)s Pension or Permanent Impairment Payments, provided they are Australian residents.
The date that these payments will be made has not been confirmed, but it is expected to be in this financial year.
How we can help
There’s an old saying that ‘the only certainties in life are death and taxes’. Regardless of who wins the next election, it makes sense to plan your financial future and structure your investments tax-effectively.
At Create and Protect Financial Planning, we can help you to do that. We’ll take the time to understand your needs and goals so that we can provide you with the best possible advice.