So, we’ve had the budget. It’s great for journalists and TV news, but don’t make any big decisions just yet. Budget measures take some time to become law, and with a ‘hard-to-pick’ election coming up very soon it’s very difficult to say how much of the budget will ever actually become law.
A couple of the measures will become effective immediately or at least before June 30, but many elements are ‘campaign material’ only at this point. We will keep an eye on it and speak to our clients about how any changes may affect their strategies if and when the changes become likely or real.
For those that like a bit of reading, here are the main points of the budget as I see them:
Business Changes
The Instant Asset Tax Write-Off will increase to $30,000 and become available for medium sized businesses (those with an aggregated annual turnover of between $10 million and $50 million) as well as small businesses. The increased threshold and eligibility apply from the release of the budget at 7:30pm on 2 April 2019. The write-off will operate until 30 June 2020.
Income Tax
The Low- and Middle-Income Tax Offset (LMITO) will be increased. The base amount from $200 to $255 and the maximum amount from $530 to $1,080. Those with incomes between $48,000 and $90,000 will be eligible to receive the maximum offset of $1,080. The offset phases out at $126,000.
The changes are to apply for the current financial year, which means if Government can legislate these changes the offset will apply to tax returns lodged from 1 July 2019.
Tax Rate Changes: From 1 July 2024, a reduction in the 32.5 per cent tax rate to 30 per cent, abolishment of the 37 per cent tax rate and increase the threshold for the 30 per cent tax rate to $200,000. This tax bracket will apply to incomes between $45,001 and $200,000.
Superannuation
Flexibility for Older Australians voluntary superannuation contributions (both concessional and non-concessional) will be allowed to be made by those aged 65 and 66 without meeting the work test from 1 July 2020. People aged 65 and 66 will also be able to make up to three years of non-concessional contributions under the bring forward rule. Those up to and including age 74 will be able to receive spouse contributions, with those 65 and 66 no longer needing to meet the work test.
Tax Relief on Merging Funds current tax relief for merging superannuation funds that is due to expire on 1 July 2020 will become permanent. The current tax relief allows the transfer of revenue and capital losses to a new merged fund, and to defer taxation consequences on gains and losses from revenue and capital assets.
Aged Care
Home Care Packages will support elderly people who choose to receive care in their own homes, $282.4 million will be provided over five years from 2018-19 for an additional 10,000 home care packages.
Commonwealth Home Support Program: $5.9 billion over two years from 2020-21, the CHSP contributes home support services, such as meals (Meals on Wheels), personal care, nursing, domestic assistance, home maintenance, and community transport, all to assist older people to live independently in their own home.
Elder Abuse: a national plan to Respond to the abuse of older Australians. $18 million to create a new National Hotline (1800 ELDERHelp or 1800 353 374) and conduct trials of frontline services for victims of abuse. The Government is also contributing $1.5 million towards developing a Serious Incident Response Scheme.
Energy Assistance
An Energy Assistance Payment of $75 for singles and $62.50 for each member of an eligible couple ($125/couple) who receive a qualifying payment on 2 April 2019 to provide relief from high energy costs. Payments to benefit: Age Pension, Carer Payment, Disability Support Pension, Parenting Payment Single, and Veterans’ pensions and payments.