2019 Federal Budget: What it means for Individuals

Personal income tax cuts were the headline of the 2019 Federal Budget – along with a change to super contributions and a new work test age.

By

Treasurer Josh Frydenberg’s first Budget focuses on reducing the tax burden for the majority of working Australians, greater superannuation flexibility for retirees and a one off energy relief payment for eligible income support recipients.

Personal tax savings

  • Immediate tax relief: Low and middle income earners will receive a tax saving of up to $1,080 per person. This can be claimed in the 2018/19 tax return.
  • Preservation of tax relief for low and middle income earners: From 1 July 2022, the 19 per cent tax bracket will increase from $41,000 to $45,000, with an increase in the low income tax offset from $645 to $700.
  • Reduction in key marginal tax rate: From 1 July 2024, the current 32.5 per cent marginal tax rate will drop to 30 per cent for income between $45,000 and $200,000.
  • Minimisation of bracket creep: The Government estimates that from 1 July 2024, 94 per cent of taxpayers will have a marginal tax rate of no more than 30 per cent.

Greater superannuation flexibility for retirees

  • Changes to voluntary super contributions: Australians aged 65 and 66 will be able to make voluntary super contributions without meeting the work test – removing the need for people of this age to work a minimum 40 hours over a 30 day period.
  • Increasing age limit for spouse contributions: The age limit for people to receive contributions made by their spouse on their behalf increases from 69 to 74 years.
  • Extended access to bring-forward arrangements: People aged 66 and under will now be able to make three years’ worth of non-concessional contributions to their super in a single year, capped at $100,000 a year.

Small to medium business

  • Increase in instant asset write-off: The threshold for the instant asset write-off increases to $30,000 from $20,000. It has also been broadened to include businesses with up to $50 million in turnover, making it available to around 3.4 million Australian businesses.

Pensioners and welfare recipients

  • Energy Assistance Payment: Over 3.9 million eligible Australians will automatically receive a one-off payment of $75 for singles and $125 for couples (combined) to assist with their energy bills. This payment will be exempt from income tax and not counted as income for social security purposes.

Note: These changes are proposals only and may or may not be made law.

For more insights about what the federal budget means for you visit mlc.com.au/eofy.