Forecasted budget surplus of $45 billion over the next four years
Including immediate tax relief to low and middle income earners benefiting more than 10 million taxpayers
Small and medium size businesses (annual turnover of less than $50 million) can write off any asset worth up to $30,000
$525 million for vocational education and 80,000 apprenticeships. Boost to incentive payments.
Growth in 2019-20 and 2020-21
$100 billion transport infrastructure over the decade to ease congestion, rail, airport, safer roads, freight routes and access to ports
The Budget 2019-20 was delivered on 2 April 2019 as the Budget that is back in the black and back on track. The Treasurer announced a forecasted budget surplus of $7.1 billion for 2019-20, and a total of $45 billion of surpluses over the next four years.
The Government is delivering tax relief of $158 billion over the decade to low and middle income earners that will immediately benefit more than 10 million taxpayers, with 4.5 million receiving the full amount of the benefit.
The Treasurer also announced the Government's plan to change the personal income tax system by creating a simpler system of fewer tax brackets from 1 July 2014. The middle tax brackets will be consolidated to cover $45,000 to $200,000 at a reduced rate of 30 per cent from 1 July 2024.
Low and middle income tax offset
Low and middle income tax offset (LMITO) is a non-refundable tax offset. The Government announced it will increase the LMITO to provide tax relief of up to $1,080 per annum for 2018-19 to 2012-22 income years.
The LMITO will provide the following tax relief:
|Taxable income $||Reduction in tax|
|37,000 or less||$255|
|37,001 – 48,000||$255 plus 7.5% of excess over $37,000|
|48,001 – 90,000||$1,080|
|90,001 – 126,000||$1,080 less 3% of excess over $90,000|
|126,001 or more||Nil|
The LMITO is in addition to the existing Low Income Tax Offset (LITO). The maximum LITO is currently $445.
Taxpayer will start to benefit from LMITO from 1 July 2019 when they lodge their 2018-19 income tax return.
From 1 July 2022, LMITO and LITO will merge into LITO, and the LITO will increase to $700. The LITO will reduce at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000, and reduce at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.
Personal income tax rates
The Government announced the following changes to the personal income tax brackets and rates:
|Tax rate||Thresholds from 1 July 2018
(2018-19 – 2021-22)
|Thresholds from 1 July 2022
|0%||0 – 18,200||0 – 18,200|
|19%||18,201 – 37,000||18,201 – 45,000|
|32.5%||37,001 – 90,000||45,001 – 120,000|
|37%||90,001 - $180,000||120,000 – 180,000|
|45%||180,001 or more||180,001 or more|
From 1 July 2024:
|Thresholds from 1 July 2024||Rate from 1 July 2024|
|0%||0 – 18,200|
|19%||18,201 – 45,000|
|30%||45,001 – 200,000|
|45%||200,001 or more|
Increasing the Medicare levy low-income thresholds
Medicare levy low-income thresholds will also be increased as follows:
For each dependent child or student, the family income thresholds increase by a further $3,471, instead of the previous amount of $3,406.
There were no major changes to the existing superannuation system. There are measures to improve flexibility for older Australians.
Voluntary superannuation contributions – removing work test for those aged 65 and 66
From 1 July 2020, people age 65 and 66 will be able to make voluntary superannuation contributions without meeting the work test, being working a minimum of 40 hours over a 30 day period in the financial year.
Currently, a person aged 65 to 74 can only make voluntary superannuation contributions if they meet the work test.
Voluntary superannuation contributions – extending the 'bring-forward rule' for those age 65 and 66
From 1 July 2020, people age 65 and 66 will be able to make up to three years of non-concessional contributions under the bring-forward rule.
Currently, a person age 65 and over cannot access the bring-forward rule.
Spouse contributions – increasing the eligibility age
From 1 July 2020, those up to and including age 74 will be able to receive spouse contributions, subject to the spouse meeting the work test. Those age 65 and 66 do not need to meet the work test.
Instant asset write-off
From 2 April 2019 (Budget night), the instant asset write-off threshold is increasing to $30,000. Small and medium sized businesses with aggregate annual turnover of less than $50 million will be eligible.
The change previously announced on 29 January 2019 to increase the threshold from $20,000 to $25,000 for small businesses (aggregate annual turnover of less than $10 million) will interact with the changed announced in the Budget.
This means that small business will be able to immediately deduct assets purchased in the 2019 income year as follows:
The announced instant asset write-off measure increasing the threshold to $30,000 and expansion to medium sized businesses will apply to 30 June 2020, and thereafter will revert back to the small busines instant asset write-off.
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