Summary of Federal Budget 2019

 
Summary of Federal Budget for Aged Care
 

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.

Superannuation

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.

Tax

  • Immediate

    • 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

Social Security

  • 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

Aged Care

  • $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.

Financial Regulation

  • 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.

Local Region

  • $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.

Contact us on 4962 4440 or you can fill out our Pre-appointment Questionnaire here and one of the team will be in touch.