How Will The Federal Budget Impact You?

Federal Budget

The Federal Budget was announced last week and it could be described as typical for any government who is considering going to the polls, definitely no nasties (yay!).

The key things that might impact you include:

  • Tax cuts:
    • The upper personal income tax threshold for the 19% tax rate will increase to $45,000 from 1 July 2022.
    • The 32.5% tax rate will reduce to 30% from 1 July 2024.
  • Increase to the age at which people can contribute to super without meeting the work test.
  • A one-off energy assistance payment of $75 for people receiving government assistance.
  • Increase to the tax offset for low- and middle-income earners.


Personal income tax cuts

The Government proposes the following personal income tax rates:

Tax rate Current
Threshold from 
1 July 2022
Threshold from 
1 July 2024
Nil 0 – $18,200 0 – $18,200 0 – $18,200
19% $18,201 – $37,000 $18,201 – $45,000 $18,201 – $45,000
32.5% until 30 June 2024 then it changes to
30% from 1 July 2024
$37,001 – $90,000 $45,001 – $120,000 $45,001 – $200,000
37% $90,001 – $180,000 $120,001 – $180,000
45% $180,000+ $180,000+ $200,000+
  • From 1 July 2022, the upper threshold of the 19% tax bracket will increase from $41,000 to $45,000 and the low-income tax offset (LITO) will increase from $645 to $700.
  • From 1 July 2024, the 32.5% tax rate will reduce to 30%.

To help you estimate the tax benefits for your level of income, refer to the Government’s online calculator

Low- and middle-income tax offset (LMITO)

The low- and middle-income tax offset (LMITO) will increase for the 2018/19 to 2021/22 financial years. After this, LMITO is no longer available. The maximum LMITO will increase from $530 to $1,080.

Medicare levy low income thresholds

The Medicare levy low income thresholds will be increased to reflect movements in the consumer price index (CPI) from 1 July 2018.

Benefits for small business – enhancements to the instant asset write‑off

Small or medium businesses can immediately deduct eligible assets costing less than  $30,000. The assets must be first used or installed, ready for use, between 7:30pm (AEDT) on 2 April 2019 and 30 June 2020.

Assets acquired between 29 January 2019 and before 7:30pm (AEDT) on 2 April 2019 are subject to a $25,000 threshold and is limited to small businesses.

The instant asset write-off had been expanded to medium businesses by increasing the annual turnover threshold from $10 million to $50 million. However, certain assets are not eligible.


Superannuation contributions for older Australians

From 1 July 2020, there will be no work test for people aged 65 and 66 when making concessional and non‑concessional contributions. The current legislation requires you to work at least 40 hours over a 30-day period to contribute.

Additionally, the 3-year bring-forward for non-concessional contributions is proposed to be extended to people aged 65 and 66. This means they could contribute up to $25,000 concessional and $300,000 in non-concessional contributions in one year.

Changes To The Protecting Your Super Package

In March 2019, the Protecting Your Super Package legislation passed. This means:

  • administration and investment fees will be capped at 3% if you have a super balance of below $6,000
  • you will no longer be charged an exit fee from 1 July 2019
  • insurance cover will cease if your account has been inactive for 16 consecutive months

The proposal to only offer insurance on an opt-in basis for accounts with balances of less than $6,000 and new accounts belonging to members under the age of 25, did not pass into legislation. The Government will delay the start date for this measure until 1 October 2019.

Spouse contributions

From 1 July 2020, the age you can continue to receive spouse contributions will increase to 74, if the work test is met. This will help couples equal up their super balance as they near retirement. Currently, this is only an option provided your spouse hasn’t turned 70.

Aged Care

Additional Home Care packages

The Government will provide funding for an additional 10,000 Home Care places over five years from 2018/19 financial year.

Social Security

Energy Assistance Payment

A one-off Energy Assistance Payment of $75 for singles and $125 per couple. To be eligible, you must be receiving a qualifying Government payment on 2 April 2019 and be resident in Australia.

If you would like some more detail on any of these measures click here for a more detailed report on the budget from BT. Of course none of these changes are set in stone until they pass Parliament and it will be interesting to see how much gets through before the election is called.

So now the budget is known the next big stop is who will win the election and how will that impact your money? I will write more on this as the real campaigning starts and we know more about the proposed policies from both sides.

If you would like to talk about the Federal Budget further please send me an email on [email protected]

Best wishes,

Shelley Marsh
Financial Adviser

General Advice Warning:

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. It does not represent and is not intended to be personal advice.  Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs. We strongly suggest that you seek professional financial advice before acting.