Blog Article

2019 Federal Budget Run-Down


The Liberals have tried to butter-up voters in this budget, but they have to be re-elected for any of this to happen.   Here is what they are promising:

1.     Individual Tax Cuts

  • No cuts to the tax rates for now, but they’ve tinkered with some of the offsets as follows:
    • Taxpayers with income between $48,000 and $90,000 will be eligible for a maximum $1,080 tax offset, phasing out up to incomes of $126,000.  Ends on 30th June 2022.
    • The low income tax offset will increase from $645 to $700 per year.
  • Then, from 1 July 2022 the tax rates will be manipulated as follows:
    • income tax threshold for the 19% income tax rate will increase from $41,000 to $45,000 per annum;
  • From 1 July 2024 the 32.5% personal tax rate will reduce to 30%, with the 37% tax rate abolished, and the 30% tax rate applying up to income of $200,000.  There are some real tax savings in here for middle Australia.
  • The Medicare levy low-income thresholds for singles, families, seniors and pensioners will be increased from the 2018/19 income year.

2.    Business Asset Write Offs

  • The instant asset write-off threshold for businesses with combined turnover of less than $10m will be increased from $20,000 to $30,000 for eligible assets that are first used, or installed ready for use, from 7.30 pm (AEDT) on 2 April 2019 to 30 June 2020.
  • Medium sized businesses with a combined turnover of $10m or more but less than $50m will now also be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from 7.30 pm (AEDT) on 2 April 2019 to 30 June 2020.

3.    Superannuation

Some good stuff announced here:

  • Members of regulated superannuation funds will not have to meet the work test after 1 July 2020 if they are 65 or 66 years of age.
  • The restrictions on claiming the spouse contribution tax offset will be eased from 1 July 2020, giving 70 to 74 year old spouses eligibility.


4.    Indirect taxes and grants

  • NO changes affecting GST.
  • For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax (LCT) paid, up to a maximum of $10,000.
  • Currently these businesses may be eligible for a partial refund of LCT up to a maximum of $3,000 on 4-wheel or all-wheel drive cars.
  • The Budget confirmed that the Government will contribute an additional $60m towards the Export Development Grant Scheme over the next 3 years.


And Labor’s Reply?

  • Don’t bank on any of this stuff happening.   The Liberals have to be re-elected first.  However, they will match the tax cuts proposed by the Liberals for those earning between $48,000 and $126,000.
  • Labor will extend the tax cuts to those earning less than $40,000 – but they will limit the tax benefits for those earning more than $125,000.
  • Labor will boost payments for cancer patients through Medicare, restore public health funding cut by Liberals, put $1Bn into TAFE and apprenticeships – looking to put 150,000 new apprenticeships out there.
  • Labor will give $2000 to families looking to install a battery storage system
  • How are they going to pay for all this?
    • Labor will change negative gearing to remove “unfairness”
    • Labor will take away refunds of franking credits
    • Labor will reduce the 50% discount on capital gains
  • If Labor gets in, expect no changes on day-one.   They will do a mid-year economic statement around September, and then set the platform for their changes after that.

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