Election sprint or fiscal marathon?

Visit insights.findex.com.au/budget2019 to access our full Federal Budget Analysis, which explores key outcomes relevant to Individuals, Businesses and Trade.

With a new Election fast on the horizon, the Budget announcement - and the inevitable reply from the Opposition - has been highly anticipated.

The current Government released its Federal Budget on 2 April 2019, and for the first time in more than a decade, the Budget is positioned to be in a surplus. With the Budget centred around a ‘back to black’ position, it was always going to be a question of whether the Government would take a longer-term view towards strengthening and stabilising the economy, or use the improved budgetary position for short term sprint across the finish line to appeal to voters pre-election.

Highlights

  • With a view to providing consistency and reassurance, the aim of this Budget is to build a stronger Australian economy and secure a better future for all. As such, the key areas of focus in this year’s Budget are:
  • guaranteeing essential services, such as aged care, Medicare, hospitals, roads and education;
  • investing in economic and community infrastructure, such as creating additional transport infrastructure and supporting farmers through natural disasters; and
  • lowering taxes.

The main tax announcements proposed in this year’s Budget are designed to:

  • lower taxes for individuals and greater tax concessions for small to medium enterprises (SMEs);
  • enforce more stringent regulations to ensure large businesses pay their fair share of tax; and
  • enable those approaching retirement to contribute more money into their superannuation.

Read on for a breakdown of the main proposals and potential start dates from the 2019-20 Federal Budget.

Individuals

Proposed Measure 1

• Increase the low and middle income tax offset from $530 to $1,080

Application Date: From 1 July 2018 (Note: You can potentially claim the higher amount when the 2019 income tax return is lodged)

Proposed Measure 2

• Lower the 32.5% marginal tax rate to 30%

Application Date: From 1 July 2024 (Note: the 37% marginal tax rate will be abolished from this date)

SMEs

Proposed Measure 1

• Increase and expand instant asset write-off. Under rules existing today, a taxpayer with a turnover of less than $10 million can only qualify for the instant asset write-off on business assets bought for less than $20,000.

Application Date: From 2 April 2019 to 30 June 2020 - In this time, a taxpayer with a turnover of less than $50 million can qualify for the instant asset write-off on business assets bought for less than $30,000.

Proposed Measure 2

• Defer the start date of the proposed Division 7A changes by 12 months

Application Date: From 1 July 2020

Large Enterprise

Proposed Measure

• Enforce improved regulations around tax avoidance

Application Date: $1 billion additional funds over the next 4 years for tax avoidance task force to investigate whether multinationals, large groups, trusts and high wealth individuals have paid their fair share of taxes

Superannuation

Proposed Measure

• Enable those approaching retirement to put more money into their superannuation

Application Date: From 1 July 2020 - People aged 65 or 66 may be able to make concessional or non-concessional contributions (and use the 3-year bring forward rule) without having to satisfy the work test (i.e. no need to work a minimum of 40 hours over a 30-day period in a financial year).

The jury is out - do you think this Budget was an election sprint or a fiscal marathon?

Through our Family Office approach and national footprint, we can connect you with the expertise across the full spectrum of accounting and financial advisory services, to help you identify your exposure - if these proposals were to become law - as well as identify potential steps to take to help manage such exposure.

Visit insights.findex.com.au/budget2019 to access our full Federal Budget Analysis, which explores key outcomes relevant to Individuals, Businesses and Trade.