Following last week’s Federal Budget we thought we would sift through the ‘government speak’ and provide a summary of the basic elements which may affect you, your family or your business.
If you have any questions or concerns, please don’t hesitate to contact us.
The Government has proposed tax savings to be delivered via a seven-year plan.
Tax rate cuts, the final not to be delivered until July 2022, start from 1 July 2019 as follows:
Tax savings for low and middle-income earners include replacing the current Low Income Tax Offset (LITO) with the new Low and Middle Income Tax Offset (LAMITO):
Treasurer Scott Morrison says this plan to combat ‘bracket creep’ will mean 94 per cent of Australian taxpayers will pay no more than 32.5 cents in the dollar by 2022.
The Government is also seeking to reduce the Medicare Levy payable by low income earners. To achieve this, they will seek to increase the threshold at which the Medicare Levy becomes payable:
- The threshold for singles will be increased from $21,655 to $21,980;
The family threshold will be increased from $36,541 to $37,089;
The threshold for single seniors and pensioners will be increased from $34,244 to $34,758; and
The family threshold for seniors and pensioners will be increased from $47,670 to $48,385.
For each dependent child or student, the family income thresholds increase by a further $3,406, instead of the previous amount of $3,356.
Pensioners will be able to earn more money without impacting their pension under the Pension Work Bonus scheme. The program will be expanded to include the self-employed.
There is also good news in terms of superannuation.
- A three per cent (3%) annual cap on fees for accounts with less than $6,000 will be applied.
Exit fees on all superannuation accounts will be banned.
In addition, all inactive super accounts with balances less than $6,000 will be transferred to the Australian Taxation Office, which will then “proactively” reunite these inactive accounts.
An extension of the $20,000 instant asset write-off to June 30, 2019 will benefit small businesses with annual turnover less than $10 million.
Some businesses may be affected by the governments crack-down on cash payments which will introduce a limit of $10,000 for cash payments made to businesses for goods and services from 1 July 2019. This measure will require transactions over that threshold to be made through an electronic payment system or by cheque.
From 1 July 2019, businesses will no longer be able to claim a deduction for payments to employees, such as wages, where they have not withheld the required amount of PAYG withholding, or to contractors where the contractor does not provide an ABN and the business does not withhold any amount of PAYG.
The Government has announced it will further expand the contractor payment reporting system from 1 July 2019 to include the following industries:
- security providers and investigation services;
road freight transport; and
computer system design and related services.
VISIT THE BUDGET WEBSITE HERE FOR MORE INFORMATION