2019 Federal Budget
Last night the Treasurer, Josh Frydenberg, released the Government’s 2019-20 Budget featuring a forecast return to surplus, accelerated income tax cuts and a range of measures likely to impact your advice for both pre and post retirement clients.
The 2019-20 Budget has been delivered in April 2019, a month earlier than usual, and is expected to be shortly followed by the proroguing of the Parliament for the 2019 election. In this context, it can be seen as an unofficial start of the Coalition’s election campaign.
The foundation of the 2019-20 Budget is the Treasurer’s announcement that the budget will return to surplus in 2019-20, with a projected surplus of $7.1 billion (0.4 per cent of a total federal budget of around $500 billion). The surplus benefits from a substantial increase in revenue from company tax, based on strong commodity prices, which has more than offset a softer outlook for household consumption, dwelling investment and average wages.
As widely anticipated, the Treasurer has announced an accelerated program of tax cuts, building on the low and middle income tax relief announced in the 2018-19 Budget. An increase to the Low and Middle Income Tax Offset will be available for most taxpayers for 2018-19, provided the Government can secure passage of the required legislation through the Parliament.
Proposed major reform of income tax rates and thresholds would see most Australians facing a marginal tax rate of 30 per cent from 1 July 2024.
The Government has also announced an extension of its infrastructure investment program, with major projects including high speed rail between Geelong and Melbourne and additional funding for urban congestion and strategic road projects.
The budget contains few new savings measures, with the vast majority of new savings coming from a more efficient administration of income support payments using Single Touch Payroll data.
Some other major announcements in the 2019-20 Budget include:
- one-off Energy Assistance Payment for recipients of income support;
- an increase to the value and eligibility for the instant asset write off for small and medium sized business up to $50M turnover;
- changes to voluntary superannuation contribution rules for people aged 65 and over; and
- significant funding to implement the Government’s response to the Financial Services Royal Commission.
If you scroll further down the page you can access a well written and easy to understand summary report from The Financial Planning Association of Australia.
Please remember that you are always welcome to contact us at any time if you have any questions about how this year’s budget might affect you.
Please click on the image below to read the summary report from
the Financial Planning Association of Australia
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