Federal Budget 2019 – 2020: Overview of Proposed Changes

Please note: Some of these proposals are still being debated within the government and some of the proposed changes have not yet been legislated

  • Proposed increase of the threshold for instant asset write-off from $20,000 to $30,000 for small and medium sized businesses with an annual turnover of less than $ 50 million.
  • Proposed tax rate reduction to 25%  for small and medium companies with an annual turnover of less than $50 million  by 2021-2022. Small and medium sized company tax rate will be 27.5 per cent in 2019-2020.
  • Proposed increase in the unincorporated small business tax discount rate which will increase to 16 per cent  or up to the cap of $1,000 by 2021-2022 .
  • Immediate tax relief for low and middle-income earners as the Government will increase the tax offset from $530 to $1,080 for singles, or up to $2,160 for dual income families from the 2019 financial year.
  • From 1 July 2024, proposed reduction of tax rate  from  32.5% rate to 30%  for  Australians earning $45,001 – $200,000.
  • Government will preserve the tax relief provided by the larger low and middle income tax offset by increasing the top threshold of the 19 per cent tax bracket from $41,000 to $45,000 and increasing the low income tax offset from $645 to $700 in 2022-2023.
  • There is a reduction for HECS/HELP repayment income threshold. For 2018-2019 income year, the minimum income threshold will now be $51,957 (Note: Your income for HECS/HELP purposes  is based on your combined income from your taxable income, reportable fringe benefits, reportable super contribution, total net investment losses and exempt income)

 

Things to consider for the 2018 – 2019 income year

1) Changes in marginal thresholds for Residents. For the 2019 financial year those earning between $37,001 – $90,000 will have a tax rate of 32.5% and those earning between $90,001 – $180,000 bracket will have a tax rate of 37%.

Example 1: Your taxable income is $90,000, the amount payable to the ATO is  $20,797 ($3,572 + (($90,000-$37,000)*32.5%). The new marginal threshold gives you an additional tax savings of $135 if your earning the same income in the 2018 financial year.

TAX RATES 2018 – 2019 (RESIDENTS)
Taxable Income Tax on this income Rate
0 – $18,200 Nil 0%
$18,201 – $37,000 19c for each $1 over $18,200 19.00%
$37,001 – $90,000 $3,572 plus 32.5c for each $1 over $37,000 32.50%
$90,001 – $180,000 $20,797 plus 37c for each $1 over $90,000 37.00%
$180,001 and over $54,097 plus 45c for each $1 over $180,000 45.00%

 

2) Changes in HECS/HELP income thresholds 2018-2019 are summarised below. 

The HECS/HELP  income threshold were changed for 2019 financial year. Individuals earning income over $51,957 are required to make repayment into their HECS/HELP debt.  Previously the repayment threshold was $55,874 in the 2018 financial year. Your income for HECS/HELP purposes  is based on your combined income from your taxable income, reportable fringe benefits, reportable super contribution, total net investment losses and exempt income

 

HECS/HELP REPAYMENT THRESHOLD 2018-2019
Repayment threshold Rate
Below $51,957 Nil
$51,957 – $57,729 2.00%
$57,730 – $64,306 4.00%
$64,307 – $70,881 4.50%
$70,882 – $74,607 5.00%
$74,608 – $80,197 5.50%
$80,198 – $86,855 6.00%
$86,856 – $91,425 6.50%
$91,426 – $100,613 7.00%
$100,614 – $107,213 7.50%
 $107,214 and above 8.00%
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