Treasurer Josh Frydenberg has delivered his 2019 Budget speech, declaring that Australia is “back in the black”.
The Budget’s key focus was a stronger economy through:
- Reducing national debt
- Job creation through investment in skills and infrastructure
- Investment in essential services like hospitals and schools
The Treasurer has declared that this will occur, not only without increasing taxes, but also by delivering income tax cuts for low- to medium-income earners and small to medium-sized businesses.
The BlueRock community should be aware of several key announcements, especially with regard to Tax and Self-Managed Superannuation Funds (SMSF).
How will the 2019 Federal Budget tax cuts affect you and your business?
BlueRock is encouraged by the announcements suggesting a lower tax bill for both you and your business. Key income tax changes on the horizon include:
- An extension and increase to the small business instant asset write-off. The threshold has increased from $25,000 to $30,000 for all assets.
- Personal income tax return cuts through:
- Immediately lifting the Low and Medium Income Tax Offset (which now effectively matches Labor’s policy). Benefits to earners include:
- A tax reduction of up to $255 for people with taxable incomes of $37,000 or less
- Changes for taxable incomes of between $37,000 and $48,000, with the value of the Low and Medium Income Tax Offset to increase at a rate of 7.5 cents per dollar to the maximum offset of $1080
- Once an individual earns $90,000, the offset phases out at a rate of 3 cents per dollar to $126,000 where it is zero
- The offset will remain for the next three income tax years until the end of 2021-2022
- Reducing the 32.5% rate to 30% for income up to $200,000 from July 2024. This means there will only be three tax rates: 19%, 30% and 45%.
- A 12-month postponement of Division 7A changes, that were due on 1 July 2019, for further consultation
- Implementation of integrity measures to the Australian Business Number (ABN) system, including:
- The requirement for ABN holders to lodge an annual income tax return from 1 July 2021
- The requirement for ABN holders to confirm the accuracy of their registration annually from 1 July 2022
- A range of spending initiatives, including further funding to the ATO for investigating multinationals, tax avoidance, use of trusts and further examination of specialist tax advice.
How will the 2019 Federal Budget superannuation changes affect you?
The Treasurer also announced a new suite of changes impacting superannuation, including:
- Removing the work test for those aged 65 and 66 years from 1 July 2020
- Access to the “bring-forward rule” for those aged 65 and 66 years
- Increasing the age limit (to 74) for spouse contributions
- Insurance on an opt-in basis for those with account balances less than $6,000, and newly created accounts for members under 25, to be delayed to 1 October 2019
- Reducing red tape for superannuation funds in how they calculate the exempt current pension income from 1 July 2020
The measures listed above are still subject to legislation passing both Houses, and of course, the Federal Election.
To learn more about how the budget changes will impact you and your business, please get in touch with your BlueRock advisor. We’d be happy to help.