2019 Federal Budget – What it means for small business and individuals in a nutshell

The 2019 Australian federal budget is the first for treasurer Josh Frydenberg and Prime Minister Scott Morrison. Designed to entice voters into re-electing a liberal government, the winners to come out of this years budget are small business and low to middle income earners. If the government is not re-elected based on it’s budget, then many of the following proposed policies are likely to be abandoned or replaced with labor policy.

Small and Medium Business Entities (SME’s)

Increase in ‘instant asset write-off’:

The threshold for the instant asset write-off has increased from $20,000 to $30,000 and is now accessible to businesses with turnovers up to $50M, making it available to 3.4 million Australian businesses

Single Touch Payroll (STP) compulsory for all business owners:

STP will be compulsory for all Australian businesses as at 1 July 2019. This requires that all employers report employee payroll data in real time to the ATO through their software packages. Small business owners should be taking the necessary steps to get STP compliant before the changes roll out at 1 July 2019. LeVeon Accountants can assist you with this process.

Individuals

Immediate Tax Relief:

Low and middle income earners will receive a tax saving of up to $1,080 per person. This can be claimed in the 2019 financial year

Additional tax relief for low and middle income earners:

From 1 July 2022, the 19% nominal tax bracket will increase from $41,000 to $45,000, with an increase in the low income tax offset from $645 to $700

Reduction in key marginal tax rate:

Starting 1 July 2024, the current 32.50% marginal tax rate for taxable income between $45,000 and $200,000 will drop to 30%.

Minimisation of median marginal tax rate for taxpayers:

The government estimates that from 1 July 2024, 94% of Australian taxpayers will have a marginal tax rate of no more then 30%

Energy Assistance Payment:

Pensioner and welfare recipients will automatically receive a one-off payment of $75 for singles and $125 for couples (combined) to assist with their energy bills. This payment is exempt from income tax and not counted towards income for social security purposes.

Superannuation

Changes to voluntary superannuation contributions:

The maximum age for Australians to make voluntary super contributions without requiring to meet the ‘work test’ has risen from 64 to 66 allowing Australians aged 65 and 66 to increase their super balances before having to work a minimum of 40 hours in a 30-day period.

Increasing age limit for spouse contributions:

The age limit for Australians to receive contributions made by their spouse on their behalf increases from 69 to 74 years.

Increasing age limit for ‘bring-forward’ arrangements:

Australians aged 66 and under will now be able to make 3 years’ worth of non-concessional contributions to their superannuation in a single year, capped at $100,000 a year. So, there you have it, all of the major budget proposals that may affect you in a nutshell. Please note that these changes are proposals only and may not be made law.