This years budget is unusual in that it is more an outline of policies for the Liberal government heading into the upcoming election rather than something that is likely to be legislated over the coming months. Whether these budget measures ever become law will depend on either the Liberal government being re-elected or the Labor party matching the commitments. One measure that will go ahead regardless is an immediate one off energy cost rebate to pensioners of $75 for singles and $120 for couples.
Building on the last years budget, the Low and Middle income earners tax offset will be significantly increased under a Liberal government. Labor have agreed to match this so it is likely to happen. The offset applies to the 2019 to 2022 tax years and applies as follows:
While the offset only applies until 2022, the offset is to be replaced by tax cuts of the same amount from the 2023 tax year.
The budget also proposes to expand on tax cuts already legislated to apply from the 2023 tax year by adjusting the 19% tax bracket threshold up to $45,000. This incorporates the increase to the tax offset above. Taxpayers who were not previously eligible for the low and middle income offset because their incomes were too high would save $540 per year from this adjustment. Labor do not agree with this.
A significant cut proposed from the 2025 tax year is to reduce the 32.5% tax bracket to 30%. As examples, for a person who earns $60,000 per year, they would save $375 and for a person who earns $120,000 per year, they would save $2,125. However this is still six years away and again Labor does not agree with this cut.
Small and Medium Business Instant Asset Write Off
It was proposed and has now already passed into law that the small business instant asset write off that currently applies to businesses with turnover under $10 million will be extended from 2 April 2019 to 30 June 2020 to businesses with turnover under $50 million. Also the cost of assets eligible for the instant write off will increase to $30,000.
New ABN Compliance Requirements
From 1/7/22 it is proposed that ABN holders will need to lodge their income tax returns on time and confirm the accuracy of their details on the Australian Business Register annually in order to retain their ABN,
Changes to Work Test for Super Contributions
It is proposed that from 1/7/2020, people aged 65 and 66 would no longer have to meet a work test to be eligible to make contributions to super.