Federal Budget 2019

While it feels a little odd to be writing about the Federal Budget prior to Easter and Anzac Day, there was nothing unusual in the budget paper handed down by Treasurer Josh Frydenburg last night.

There is no doubt that this budget is aimed fairly and squarely at the voting public to win as many of them over as possible before we head to the polling booths and many voters will be feeling like they have had a win with the promise of lower tax rates and higher tax offsets.

The problem with all of this is that with the election date announcement imminent there is unlikely to be enough time available to the Government to legislate these changes before we vote so none of the tax changes are guaranteed unless the coalition successfully retains government.

Overall this is looks like a low impact, election friendly budget that on face value lacks a true economic plan for how it’s promises of future budget surpluses will ultimately be delivered.

Here are the highlights from a tax and small business perspective.

Income tax

  • The legislated Personal Income Tax Plan will be changed to further lower taxes for individuals, including changes to the low and middle-income tax offset (LMITO), the low-income tax offset (LITO) and the personal income tax (PIT) rates and thresholds.

  • It is worth noting that the changes to individual tax rates would not commence until the 2023/2024 financial year so there is no immediate benefit under this announcement.

  • The instant asset write-off threshold for businesses with an aggregated turnover of less than $10 million will be increased to $30,000 for eligible assets that are first used, or installed ready for use, from 7.30pm (AEDT) on 2 April 2019 to 30 June 2020.

  • Businesses with an aggregated turnover of $10 million or more but less than $50 million will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from 7.30pm (AEDT) on 2 April 2019 to 30 June 2020.

  • The Medicare levy low-income thresholds for singles, families, seniors and pensioners will be increased from the 2018-19 income year.

Superannuation

  • 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.

  • The calculation of exempt current pension income will be simplified for superannuation funds from 1 July 2020, allowing a preferred method of calculation and removal of some actuarial certificates.

  • Transitional tax relief for merging superannuation funds will become permanent from 1 July 2020.

  • SuperStream will be expanded from 31 March 2021 to include electronic ATO requests for release of superannuation funds and SMSF rollovers.

  • An expression of interest process will be undertaken to identify options to support establishment of a Superannuation Consumer Advocate.

Tax integrity and black economy

  • Australian Business Number (ABN) holders will be required to lodge their income tax return and confirm the accuracy of their details on the Australian Business Register annually to retain their ABN status. This means if you don’t lodge your tax returns on time you could lose your ABN.

  • The start date of amendments to private company loan legislation (Division 7A) will be delayed by 12 months to 1 July 2020.

  • The ATO will receive funding to increase activities to recover unpaid tax and superannuation liabilities with a focus on large businesses and high wealth individuals.

  • A dedicated sham contracting unit will be established within the Fair Work Ombudsman to address sham contracting behaviour by some employers.

Social security

  • There will be a one-off Energy Assistance Payment of $75 for singles and $62.50 for each member of a couple eligible for qualifying payments on 2 April 2019 and who are resident in Australia.

  • Single Touch Payroll reports lodged by employers will be shared with social security agencies from 1 July 2020.

  • Family Tax Benefit eligibility will be extended to the families of ABSTUDY (secondary) student recipients who are aged 16 years and over, and are required to live away from home to attend secondary school.

  • The HELP debt incurred for recognised teaching qualifications after teachers have been placed in very remote locations of Australia for four years (or part-time equivalent) will be extinguished. Indexation on HELP debts of all teachers while they are placed in very remote locations will no longer accrue from 14 February 2019.

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