Struggling to decipher what the outcomes are for this year’s Federal Budget? You’re not alone. Luckily for you, this stuff is our bread and butter and today we’re giving you the run down on which key areas you should be aware of as an individual, and a business owner.
Individuals
Tax relief
Aussies who earn between $18,200 and $126,000 a year will receive some form of tax cut.
Most of the tax relief will flow to those earning between $48,001 and $90,000, who will get $1080 cash back in a lump sum after they file their July 1 tax return. From 1 July 2024, the Government will reduce the 32.5 per cent marginal tax rate to 30 per cent.
Medicare levy
For the 2019-20 income year the Medicare levy low-income threshold for singles will be increased from $21,980 to $22,398. The family threshold will be increased from $37,089 to $37,794. For single seniors and pensioners, the threshold 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 increase by a further $3,471, instead of the previous amount of $3,406.
Business owners
Tax cuts
Good news for small business owners who will see the tax rate cut from 27.5 per cent to 26 per cent next year (20/21), then 25 per cent in 2021 (21/22).
Instant asset write-off
Instant asset write-off will be increased from $25,000 $30,000 for small businesses and can now be used for multiple assets; and will be extended to medium sized businesses with turnover of $50 million, up from $10 million. Winner winner!
Apprentices
Businesses will be given a $4,000 incentive to hire apprentices in industries with skills shortages like baking, bricklaying, carpentry and plumbing. Apprentices themselves will also score $2,000 when they hit key milestones. You can find more information about these incentives here.
Superannuation
Voluntary contributions
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. Currently, the work test applies to Australians aged 65 or over.
The Government will also extend access to the bring-forward arrangements, which currently allow those aged less than 65 years to make three years’ worth of non-concessional contributions, which are capped at $100,000 a year, to their super in a single year.
The age limit for spouse contributions will also be increased from from 69 to 74 years. Currently, those aged 70 years and over cannot receive contributions made by another person on their behalf.
Note that many of these changes will be dependent on who wins the upcoming election, so this is all a big “maybe” right now! After the election we will further break down the changes that are locked in.
If these changes impact you, and you aren’t sure what it means for your business or personal financial situation, don’t hesitate to get in touch.
