Now that the dust has settled and the Coalition has been returned to Federal Government in the 18th May 2019 election, we summarise for you some of their key tax policy proposals. These were announced in the Federal Budget in April 2019 and during the election campaign.
Higher Low and Middle Income Tax Offset for Individuals
– The Low and Middle Income Tax Offset (LMITO) will increase to $1,080 a year for singles (from $530) and $2,160 a year for couples. This is effective from the 2018-19, 2019-20, 2020-21 and 2021-22 tax years.
– Individuals with taxable income of up to $37,000 – will receive a reduction in tax of up to $255 with the new LMITO.
– Individuals with taxable income between $37,000 to $48,000 – will receive a reduction in tax up to a maximum of $1,080 with the new LMITO.
– Individuals with taxable incomes between $48,000 to $90,000 – will receive the maximum LMITO of $1,080.
– Individuals with taxable incomes between $90,000 to $126,000 – LMITO will phase out at 3 cents per dollar.
– Individuals with taxable incomes above $126,000 – no extra tax offset.
Reduction in Individual Tax Rates
– Progressive reductions in the marginal tax rates and income thresholds are proposed from now and will be fully implemented by the 2024-25 tax year.
– The Federal Government estimates that by 2024-25 tax year, 94% of individuals will be at a marginal tax rate of 30% or less as a result of its proposed changes.
– The proposed tax rates are below (this does not include the 2% Medicare Levy):
|Tax Rate||2018-19 to 2021-22||2022-23 to 2023-24||2024-25 Onwards|
|Nil||$0 – $18,200||$0 – $18,200||$0 – $18,200|
|19%||$18,201 to $37,000||$18,201 to $45,000||$18,201 to $45,000|
|32.50%||$37,001 to $90,000||$45,001 to $120,000||$45,001 to $200,000|
|37%||$90,000 to $180,000||$12,001 to $180,000||N/A|
|45%||Over $180,001||Over $180,001||Over $200,001|
|Low and Middle Income Tax Offset (LMITO)||Up to $1,080||Nil||Nil|
|Low Income Tax Offset (LITO)||Up to $445||Up to $700||Up to $700|
Medicare Levy Low Income Thresholds Increased
Medicare Levy Low Income Thresholds for singles, familities, seniors and pensioners have been increased from the 2018-19 tax year. These are the changes:
– Singles – threshold increased to $22,398 (from $21,980)
– Families – threshold increased to $37,794 (from $37,089)
– Single Seniors and Pensioners – threshold increased to $35,418 (from $34,758)
– Family Seniors and Pensioners – threshold increased to $49,304 (from $48,385)
– For every dependent child or student, the family income thresholds will increase by additional $3,471 (previously $3,406).
– From 1 July 2020 – individuals aged 65 and 66 years old can make voluntary concessional and non-concessional superannuation contributions without meeting the Work Test. Currently those individuals need to pass the Work Test which requires they work a minimum of 40 hours over a 30 day period.
– Spouse superannuation contributions can be made for spouses that are aged up to 74 years old (previously 69 years)
– Individuals can bring forward up to three years of non-concessional superannuation contributions (which are capped at $100,000 a year) if they are aged up to 66 years old (previously only available if under 65 years).
Business Instant Asset Write Off Changes
– Please refer to our separate blog post on the increase to the instant asset write off threshold and expansion of businesses eligible for this deduction.
– The small business simplified depreciation pool balance can be claimed as a full deduction if the balance is less than $30,000 from 2 April 2019 7:30pm to 30 June 2020. Eligible businesses are those with annual turnover of less than $10 million.
ABN Holder Responsibilities
As part of the ATO fight against the black economy, all ABN holders will be required to:
– Lodge annual income tax returns from 1 July 2021; and
– Confirm their details on the Australian Business Register every year from 1 July 2022.
Higher Luxury Car Tax Refunds for Primary Producers and Tourism Operators
– Primary producers and tourism operators may be eligible for a higher refund of luxury car tax paid of up to $10,000 (previously $3,000). This is effective from 1 July 2019.
Division 7A Amendments
– Changes to the Division 7A rules have been pushed back from 1 July 2019 to 1 July 2020.
New First Home Buyer Assistance Measures
– During the election campaign, the Coalition announced their “First Home Loan Deposit Scheme” to allow first home buyers to obtain home loans with a 5% deposit.
– The Federal Government will partner with private lenders to provide home loans to first home buyers with a 95% loan to home value ratio.
– This will be available to individuals earning up to $125,000 per year or $200,000 per year for couples.
– This scheme will start from 1 January 2020.
The above are policy proposals and have not been legislated.
Please contact us to find out more about the Coalition’s proposals and their impact on you.
Please note this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.