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The Federal Budget 2019 – At a glance

At A Glance
A campaign based budget set to define the battle ground for the imminent Federal Election.

The Instant Asset Write-Off Increased to $30,000

The Government has announced that effective from April 2, 2019 at 7.30pm, until 30 June 2020, businesses can instantly write off any asset worth up to $30,000.

The threshold for accessing the write-off has now expanded from businesses with less than $10 million up to $50 million.

Significantly more businesses can now access this benefit that wouldn’t otherwise be able to, although it pays to note this is another temporary extension of the incentive.
All the rules for applying the write-off are the same. You need to have equipment purchased and installed by the end date.

Note: assets purchase prior to 2 April 2019 will be subject to the existing write off rules i.e. $20,000 or $25,000 depending on when purchased.

Personal Tax Cuts & Tax Relief

Low and middle income tax offsets (LMITO) will be changed this year to provide a financial boost: $530 to $1080 for singles, and up to $2160 for dual income families in the 2018-19 to 2021-22 income years

In 2022-23, the 19% bracket threshold will rise from $41,000 to $45,000 and the low income tax offset will increase from $645 to $700

In 2024, the 32.5% tax rate will drop to 30%    

The LMITO applies in addition to the Low Income Tax Offset (‘LITO’). The maximum LITO is currently $445.

From 1 July 2022, both the LMITO and LITO will be replaced by a single LITO. In the 2018/19 Federal Budget, the Government announced that the maximum single LITO will be $645.

In the 2019/20 Federal Budget, the Government has now announced that the maximum single LITO will be increased to $700.

The Government will increase the Medicare levy low-income thresholds for singles, families, seniors and pensioners from the 2019 income year, as follows:

  • The threshold for singles will be increased from $21,980 to $22,398.
  • The family threshold will be increased from $37,089 to $37,794.
  • The threshold for single seniors and pensioners will be increased from $34,758 to $35,418.
  • The family threshold for seniors and pensioners will be increased from $48,385 to $49,304.
  • For each dependent child or student, the family income thresholds increased by a further $3,471, up from the previous amount of $3,406.

Expansion of the Single Touch Payroll system (STP)

The Government also proposed expanding the recently introduced Single Touch Payroll (STP) reporting regime to allow the ATO and other Commonwealth agencies to collect more data on employers.

The expansion is priced in to the tune of $82.4 million, but the Government is yet to share much detail on exactly what data might be collected other than “more information about gross pay amounts”.

The Government has also made clear that it doesn’t intend these changes to introduce more compliance complexity, or require employers to collect more details from employees than they already have.

While this may not be of primary concern for small business owners yet, STP is now mandatory, and this provides added motivation to make sure your payroll software is up to date and compliant.

New ABN regulations

Anyone with an ABN needs to keep up to date with their tax records and returns. Now the Government is following up on those who aren’t.

If you hold an ABN, from July 2021 the Government will make it mandatory for you to file your tax return if you have a tax obligation.

From July 2022, you will need to provide an annual update on your ABN status and your personal details.

Skills shortage payments

A boost to Skills Shortage payments introduced in this year’s budget will pay you $8,000 for hiring an apprentice – instead of the current rate of $4,000.

It’s all part of a significant $80 million investment in skills shortages.  

Regulations / Compliance / Investigations

  • The ATO is investing more money in investigating sham contracting. That is, employers wrongly calling their employees “contractors” despite making them follow rules and regulations like an employee.
  • The Government will provide $1 billion over four years, from the 2020 income year, to the ATO to extend the operation of the Tax Avoidance Taskforce and to expand the Taskforce’s programs and market coverage.

The Taskforce undertakes compliance activities targeting multinationals, large public and private groups, trusts and high wealth individuals.

This measure will allow the Taskforce to expand these activities, including increasing its scrutiny of specialist tax advisors and intermediaries that promote tax avoidance schemes and strategies.

Division 7A Changes Deferred

The Government has announced that it will defer the ‘start date’ of the proposed Division 7A changes by one income year, from 1 July 2019 to 1 July 2020.

Changes to Superannuation

The Government has announced that it will allow voluntary superannuation contributions (both concessional and non-concessional) to be made by those aged 65 and 66 years without meeting the work test from 1 July 2020 (ie from the 2021 income year).

An individual satisfies the work test in a particular income year where they are ‘gainfully employed’ on at least a part-time basis during the income year in which the contributions are made. For these purposes, this will be the case where the member was gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the income year in which the contribution is made.

  • The Government has announced that it will allow those aged 65 and 66 to make up to three years of non-concessional contributions under the bring-forward rule (without satisfying the work test).
    Under current law, broadly, those aged 65 and over cannot access bring-forward arrangements.
  • Individuals up to and including the age of 74 will be able to receive spouse contributions (with those 65 and 66 no longer needing to meet a work test).

Currently, those aged 70 and over cannot receive spouse contributions.

Extra $60 million for the Export Market Development Grant (EMDG)

The EMDG reimburses small businesses for any spending on export activity, which includes things like research trips overseas, advertising, and so on.