Key Features of the Federal Budget 2019 – 2020

The 2019/2020 Federal Budget sees the Government predicting a return to a surplus of $7.1 billion.

Driven by the politics of a looming election, the Government is lowering taxes and increasing spending with a focus on low/middle income earners, small business, senior Australians and transport infrastructure.

Here is a summary the key measures announced:

• Surplus Budget – a Budget Surplus of $7.1 billion has been announced after more than a decade. Govt estimates indicate surpluses over the next 4 years also and forecasting the economy to grow by 2.75% in 2019 – 20 and 2020 – 21.
• Increase to Low- and Middle-Income Tax Offset (LMITO) and Low-Income Tax Offset (LITO) – The amount of LMITO has been more than doubled and new slabs adding $255 to $1080 in the pockets of taxpayers based on their Taxable Income. The amount of LITO has also been revised to $700 as compared to $445 currently.

• Change to the personal income tax brackets – It has been proposed to gradually raise the income tax brackets and eventually reaching to a point where there would be only 3 personal income tax brackets of 19%, 30% and 45%.

• One-off Energy Assistance payments of $75 for eligible singles and $125 for couples.
• Increase in Medical Levy Low–Income Threshold

• Deferral of Deemed Dividend (Division 7A) Rules until 1st July 2020 allowing more time to private businesses to correct their cash flows.
• Instant asset write-off limit increased from $25,000 to $30,000 with the annual turnover limit qualifying for this benefit increased from $10 Million to $ 50 Million.
• Superannuation benefits

1. 1. Removal of work test requirement
   2. Extension of bring-forward arrangements
   3. Increase in age limit for Spouse contributions from 69 to 74 years.
   4. Insurance within Superannuation for young members
   5. Streamlining requirements for calculation of exempt current pension income for Superannuation Funds
   6. More funds to ATO to enable electronic refund request under a number of superannuation arrangements

• Minor amendments to hybrid mismatch rules.
• Luxury Car Tax relief for farmers and tourism operators.
• More export incentives.
• Extra funding to ATO and DVA to support the expansion of data collected through STP by the ATO and use of this data by Commonwealth agencies.
• Curb on Sham-contracting through a dedicated sham contracting unit within Fair Work Ombudsman.
• $1 Billion funds to ATO to operate Tax Avoidance Taskforce.
• More funds to ASIC and APRA to implement Royal Banking Commission measures.
• Curbs on Black economy through strengthening of the ABN system.

References
PwC’s Federal Budget Insights
Thomson Reuters weekly tax bulletin Issue no. 14, 2 April 2019

The material and contents provided in this publication are informative in nature only. It is not intended to be advice, and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Ryan Miller is the founder of Keeping Company, May 2011 – Present. A tie-loathing, people person with an entrepreneurial spirit. Ryan’s drive to modernize the accounting industry coupled with his desire to help people succeed saw the birth of Keeping Company. Focusing on the SME space, KeepingCo. empowers business owners by providing high-quality end-to-end accounting and business advisory services.

Ryan took his first Accounting role working at KPMG. He went onto further refine his skills as a Chartered Accountant taking the role of Director of a Chartered Accounting firm in Erskineville.

Ryan is a fully qualified Chartered Accountant and a member of the Institute for Chartered Accountants Australia and New Zealand. He is also a Registered Tax Agent and holds a Bachelor of Commerce from the University of South Australia.