2019-20 Federal Budget

The 2019 budget speech was presented to parliament by the Treasurer Josh Frydenberg on Tuesday, 2 April 2019 at 7.30pm Canberra time. See budget papers at budget.gov.au.

The Budget in Reply from Opposition Leader Bill Shorten was presented to parliament on Thursday April 4, 2019.

Measures announced in budget speech April 2, 2019

Personal Income Tax Measures

Increased Low and Middle Income Tax Offset (LMITO)

For the years from 2018-19 through to 2021-22 the LMITO base amount will increase from $200 to $255; the maximum amount will increase from $530 to $1080

The LMITO will be available subject to revised taxable income tests as follows:

IncomeOffset
up to $37,000$255
$37,001 to $48,000$255 plus 7.5 cents for each dollar over $37,000
$48,001 to $90,000$1,080
$90,001 to $126,000$1,080 less 3 cents for each dollar over $90,000

As before, the LMITO will be paid in arrears by inclusion in the tax assessment after tax return lodgement.

Change in tax scales

  • From 1 July 2022 the ceiling of the 19% bracket will be increased from $41,000 to $45,000
  • From 1 July 2024, the 32.5% marginal tax rate will be reduced to 30%.

Increase in the new Low Income Tax Offset

  • Under existing legislation the new LITO of $645 replaces both LITO and LMITO from 1 July 2022
  • Under the Budget 2019 proposals from 1 July 2022 the new LITO will be increased from $645 to $700 with a withdrawal rate of 5% between taxable incomes of $37,500 and $45,000, (instead of at 6.5% between taxable incomes of $37,000 and $41,000 as previously legislated). LITO will then be withdrawn at a rate of 1.5% between taxable incomes of $45,000 and $66,667.

Medicare levy low income thresholds increase

The annual indexation of medicare low income thresholds for the 2018-19 financial year:

  • Singles: will be increased from $21,980 to $22,398
  • Family: increased from $37,089 to $37,794
  • Single seniors and pensioners: increased from $34,758 to $35,418
  • 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 increase by a further $3,471 (up from $3,406).

Small Business – Instant Write-off Asset

The Government earlier this year (2019) announced that from 29 January 2019 the small business (turnover up to $10 million) instant asset deduction limit is to be increased from $20,000 to $25,000 and availability extended until 30 June 2020.

Announced in the Budget – from 7:30 PM (AEDT) on 2 April 2019 (Budget night) until 30 June 2020:

  • The small business (turnover up to $10 million) write-off limit is increased from $25,000 to $30,000, applied on a per asset basis from budget night 2 April 2019.
  • Medium sized businesses (turnover from $10 million to $50 million) will now also have access to the instant asset write off in respect of assets acquired from Budget night to 30 June 2020.
  • (As before) the small business pooling (simplified depreciation) rules and suspension of the lockout rules continue until 30 June 2020.

The Treasury Laws Amendment (Increasing and Extending the Instant Asset Write-Off) Bill 2019 has been approved by the parliament.

Luxury Car Tax — increased refunds for primary producers and tourism operators

For vehicles acquired on or after 1 July 2019, eligible farmers and tourism operators will be able to apply for a refund of any luxury car tax paid up to a maximum of $10,000 (previously $3,000). Eligibility criteria and qualifying vehicles type to remain unchanged.

Super rules for older Australians

The Treasurer has announced some loosening of super contributions rules for older Australians:

  • From July 1, 2020 Australians aged 65 and 66 will be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the Work Test. This will align the Work Test with the eligibility age for the Age Pension.
  • The age limit for spouse contributions will be increased from 69 to 74 years.
  • The age limit for access to the bring-forward arrangements be extended to those aged 65 and 66.

See further: Treasurer’s media release

Further information

Pre-budget

Morrison and Shorten’s budget battle to lower taxes

One-off energy payment

A Guide to the Commonwealth Budget

Infosheet 10 – The budget and financial legislation

Can Australia learn from its tax mistakes of the past?

 

 

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This page was last modified 2019-04-10