Federal Budget 2019 - "Back in Black"
This Budget is framed with the upcoming election in mind.
In this article we focus on the details that may impact clients of Stewart Partners.
The 2019 Federal Budget has been delivered and proposes income tax concessions for medium income earners and small/ medium businesses as well as continued infrastructure spending. There is also additional assistance for health care through supporting mental health and the fight against cancer.
With the Federal election only weeks away, relying on these proposed changes to income taxes and superannuation is premature. In summary, there was nothing material in this Budget likely to impact the current strategies of clients of Stewart Partners.
This Year’s Budget Winners:
Tax relief for medium income earners to include:
The low income tax offset has increased from $530 to $1,080 annually – providing a tax reduction of up to $255 for people with taxable incomes less than $37,000.
It is estimated that more than 10 million Australians will benefit from the new tax provisions, although only 4.5 million will receive the full amount. This will be for those who have taxable income ranging from $48,000-$90,000.
Taxpayers earning between $45,000 and $200,000 could receive a reduction in their average tax rate from 32.5% to 30%.
The table below summarises legislated and proposed income tax changes:
Age increase for concessional and non-concessional contributions:
From 1 July 2020, individuals aged 65 and 66 will be able to make voluntary contributions, such as eligible concessional and non-concessional contributions without having to meet the work test.
The age for the ‘bring forward’ contribution arrangement has also been increased. The ability to make up to 3 years' worth of contributions in one year has been extended to those aged between 65 and 66.
Please note our team is already reviewing which of our clients may benefit from this proposal, subject to it becoming legislation post the election.
The work test age will be increased from 65 to 67 and this will align with the eligibility age for the Age Pension.
From 1 July 2020, the government has proposed to increase the age limit for spouse contributions from age 69 to age 74.
This will provide more opportunities for individuals seeking to increase their spouse’s superannuation balance.
Welfare for Ageing Australia
The Budget outlined improvements to quality, safety and accessibility of aged care services, specifically to increase spending over five years from 2018-2019 to support older Australians through residential care assistance. This will include:
A one off increase to the subsidy for residential aged care recipients.
The release of an additional 10,000 home care packages across the four package levels over the five years from 2018-2019.