Federal Budget 2019 - What does it mean for you?

We have compiled everything you need to know about 2019 Australian Federal Budget into one convenient location.


Federal Treasurer Josh Frydenberg has handed down what many are describing as an ‘election year’ budget.  We take a look at the key areas you need to know that could impact your financial well-being. Bear in mind, the Budget initiatives need to pass through parliament, and survive the upcoming Federal election in order to take effect.

Budget surplus

The so-called ‘back in the black’ budget is set to deliver a surplus of $7.1 billion while still providing fiscal stimulus, chiefly through infrastructure spending and personal tax cuts. As the economy appears to be slowing, that could be good news to keep Australia on track for economic growth.

At a glance


Tax payers

Low and middle-income tax offset will increase to up to $1,080 for singles or up to $2,160 for dual income families.

Investors

No initiatives were announced that provide direct stimulus to the property market.

Retirees

66+ year olds will be able to make super contributions without meeting the current work test and be able to make three years’ of non-concessional contributions.

Motorists

Infrastructure investment is set to grow to $100 billion over the next 10 years, with funds allocated for roads, bridges, and regional airports.

SMEs

SMEs will see a decrease from 27.5% tax rate to a 25% tax rate. Also, the instant asset write-off threshold jumps from $25,000 to $30,000.

Household energy

One-off payments of $75 for singles and $125 for double income families on income support to help with energy costs.

The details

The 2019/20 Federal Budget builds on the tax cuts, largely achieved through the low and middle income tax offset pledged in last year’s Budget, which are due to take effect from 1 July 2019.

The low and middle income tax offset will increase to up to $1,080 for singles or up to $2,160 for dual income families. The offset will be available for the 2018-19, 2019-20, 2020-21 and 2021-22 income years.

After allowing for the tax cuts announced in last year’s Budget, the tax savings will have the following impact:

Annual income:

  •  Up to $18,200 - No change. People on this income will continue to pay no income tax.
  •  $18,201-$37,000 – Tax relief of up to $255.
  •  $37,001-$48,000 – Tax relief between $255 and $1,080.
  •  $48,001-$90,000 Full tax relief of $1,080.
  •  $90,001-$126,000 Tax relief gradually reduces from $1,080 to $0.
  •  Over $126,000 No tax relief in the current Budget. Last year’s Budget delivered a modest tax cut of $135.

You won’t find these tax savings in your weekly pay packet. Rather, they will be delivered as a tax offset after your tax return has been lodged from 1 July 2019. The savings aren’t big but every bit extra means more money towards your home buying deposit – or to manage home loan repayments.

Personal tax rates lowered from 2024

As part of a broader structural tax change, the Budget proposes two rafts of changes – the first in 2022 and 2024.

In 2022-23, the upper income threshold for the 19% tax bracket will rise from $41,000 to $45,000 and the low income tax offset will be increased from $645 to $700.

In 2024, the 32.5% tax rate will be cut to 30%, aligning personal tax rates with company tax rates. The Budget also proposes abolishing the second highest tax rate of 37% by lifting the 30% marginal tax rate threshold from $87,001 to $200,000 as shown in the table below.

This would give tax relief to those earning between $45,000 and $200,000, which covers 94% of all Australians. It also cuts the number of income tax brackets from five to four, meaning all income earners between $45,001 and $200,000 effectively pay the same tax rate.

These changes are scheduled to come into effect from 2024-25, so the Morrison Government will need to win the next two elections to implement them. That means the changes won’t make a difference to today’s property market but, assuming they come into effect, they will provide extra cash to manage a mortgage.

Rates in 2017-18 Thresholds in 2017-18 New Rates in 2024-25 New Thresholds in 2024-25
Nil Up to $18,200 Nil Up to $18,200
19 per cent $18,201 - $37,000 19 per cent $18,201 - $45,000
32.5 per cent $37,001 - $87,000 30 per cent $45,001 - $200,000
37 per cent $87,001 - $180,000 - -
45 per cent Above $180,000 45 per cent Above $200,000
Low income tax offset in 2017-18 Up to $445 Low income tax offset in 2024-25 Up to $700

Source: https://www.budget.gov.au/2019-20/content/tax.htm

No initiatives were announced that provide direct stimulus to the property market.

From 2020-21, 65- and 66-year olds will be able to make voluntary superannuation contributions without meeting the current work test.

The same demographic will be permitted to make three years’ worth of non-concessional super contributions, currently capped at $100,000 annually. At present, only under-65s can access this arrangement.

The age limit for spousal contributions will be raised from the current level of 69 to 74 years.

Small and medium‑sized companies currently facing a 27.5% tax rate will have a 25% tax rate by 2021-22, which is five years earlier than previously planned. This compares to the standard company tax rate of 30%.

The instant asset write-off threshold jumps from $25,000 to $30,000, and will be available to businesses with an annual turnover of up to $50 million. The threshold is proposed to return to $1,000 on 1 July 2020.

The Government has legislated to bring forward the increases to the unincorporated small business tax discount rate, which will rise from 8% at present to 13% in 2020-21 and 16% from 2021, up to the existing cap of $1,000.

A $525 million skills package is designed to create 88,000 new apprenticeships and double incentive payments to employers in industries experiencing skills shortages.

Infrastructure investment is set to grow to $100 billion over the next 10 years, with funds allocated for roads, bridges, and regional airports. It includes $3.5 billion for the first stage of the Western Sydney North-South Rail Link and a new pledge of $2 billion for a fast rail link from Geelong to Melbourne.

This is good news for property markets across regional areas and outer suburban locations. Improved connectivity to major city centres makes the more affordable outer areas even more attractive to commuters.

These projects certainly won’t be completed overnight but it could help to support home values in those areas benefiting from improved transport infrastructure.

Also supporting commuters, the Government's ''Urban Congestion Fund'' will increase from $1 billion to $4 billion, with funding of $500 million earmarked for commuter car parks.

Following on from the Banking Royal Commission, the Government is allocating $550 million to help finance industry regulators ASIC and APRA monitor the banking industry, and restore consumer confidence in the financial sector.

While Josh Frydenberg noted that these initiatives are designed to improve and strengthen our financial system, it is important to remember that on a personal level, your financial adviser and mortgage broker both play key roles.

Our financial lives are becoming more - not less - complex, as evidenced by a Budget that once again brings changes to our tax and super systems.

Making the right financial decision to achieve your goals is more important than ever.    

Mortgage Choice brokers and financial advisers are here to help you make better choices for a better life.

As experts in their field, our brokers and advisers can inform, advise and support you on the issues that matter, like how to achieve your goals of becoming a home owner or property investor, how to take control of your cash, and how to get the most suitable deal for your needs - from your home loan right through to your choice of super fund.

The Government will seek a vote in Parliament this week for one-off payments of $75 for singles and $125 for double income families on income support to help with energy costs. The measure excludes those on Newstart.

The Government will seek a vote in Parliament this week for one-off payments of $75 for singles and $125 for double income families on income support to help with energy costs.

There’s good news for families with preschoolers: funding will continue for 15 hours of preschool education per week in the year before school.

Speak to a local expert about how the federal budget might effect you

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