Summary of Federal Budget 2019
Federal Budget 2019
The Federal Government handed down its pre-election budget Tuesday 2nd April. Here’s a quick summary of some elements that might affect you.
For those nearing retirement, there is more scope to make contributions to super:
Increase the age you are able to make contributions to super without passing a work test from 65 to 66 from 1 July 2020 – this is in line with the rise in Age Pension age
Increasing the age of ‘spouse’ for spouse contributions to superannuation from 69 to 74 from 1 July 2020, work test required for receiving spouse from age 67
Increase the age you are able to use the bring forward rule for non-concessional contributions from 65 to under 67.
At the other end of the spectrum, to try to protect superannuation balances from erosion due to insurance premiums, superannuation fund trustees will not be allowed to offer automatic insurance for
New members under 25 who open an account on or after 1 October 2019
Members with balances under $6,000.
Increase the instant asset write off to $30,000 per asset for small and medium business
1 July 2018
Increase in the Low and Middle Income Tax Offset (matched by Labor)
Medicare Levy threshold increase
From 1 July 2022
Increase upper threshold of 19% tax bracket from $41,000 to $45,000
Increase Low Income Tax Offset - applicable for those earning up to $66,667
From 1 July 2024 (Labor has specifically said it will not be implementing these)
Reduce tax rate from 32.5% to 30%
Government has already legislated to remove the 37% tax bracket as of this date – 30% tax rate will apply from $45,001 to $200,000
Effectively this means that all individuals earning under $200,000 will receive a tax cut or rebate between now and 1 July 2024
Energy Assistance Payment – $75 (singles) and $125 (couple combined) one off payment by the end of June 2019 (non-taxable). Payable to those in receipt of Social Security payments including Newstart.
From 1 July 2020, data-sharing will remove the need for those on social security who normally need to report income from needing to report this income where their employer is using the Single Touch Payroll system
$724 million in funding to
Increase the basic subsidy for residential aged care recipients
13,500 additional aged care spaces
10,000 additional home care packages across all four levels
Increase in dementia and veterans home care supplements
Strengthening aged care regulations.
$5.9 billion to extend the Commonwealth Home Support Program, which was due to cease on 30 June 2020, to 30 June 2022. This program provides support services to assist individuals to remain living in their own home.
Simplification of Aged Care entry forms.
In response to the Banking Royal Commission
$400m additional funding for ASIC over the next 4 years
$150m additional funding for APRA over the next 4 years
$35m additional federal court funding in anticipation of cases brought by the regulators following the royal commission.
$1.6 billion to extend the M1 Pacific Motorway to Raymond Terrace
$200m for a third crossing of the Hawkesbury River
Labor Budget Reply
As it is not in government, Labor has provided less detail than the government in their budget reply. But as this is an election year, the detail is still important. Apart from those mentioned above, Labor is proposing the following if it is elected:
$2.3 billion to reduce out of pocket medical expenses for cancer patients
Labor have previously said they would match the M1 to Raymond Terrace, but have not confirmed it in the budget reply.
Greater tax cuts for those on an income under $48,000 pa
Previously proposed changes:
Removal of negative gearing – cannot negatively gear on any new property purchases, except new houses. Existing negative gearing arrangements can remain in place.
Reduction in capital gains discount – reducing the capital gains discount available after the sale of an investment that has been held for more than 12 months from 50% to 25%. This will be for new investments only, those already purchased will not be affected. Superannuation funds and small businesses will also not be affected.
This is by no means a comprehensive summary of either the Budget or the Budget Reply – it is designed to give you some information on some of the proposals that may be of interest to you.
As it is an election year, take a look into what each party is proposing, and remember – none of this has been passed into law yet and whichever party gets elected, they then need to get these proposals passed.
Our team of specialists are here to help
If you have questions about how the federal budget might affect your financial future or looking for strategic financial advice, get in touch with the Rethink Financial Planning team. We’re a team of highly-trusted financial advisers in Newcastle and can offer you personalised financial advice.