From the 2018-2019 income year, the low and middle-income tax offset (LMITO) has been increased by $550. This now means individuals can have their tax reduced by up to $1,080 and dual income families up to $2,160 after lodging tax returns for the 2018-19 year.
In 2024-25, the 32.5% tax rate will be reduced to 30%, creating only three tax brackets for Australians. It is projected that by 2024-25, 94% of taxpayers will face a marginal rate of 30% or less. With this new plan, the 19% rate threshold (24% of taxpayers) will be increased from $41,000 to $45,000, the 30% rate (70% of taxpayers) will be $45,001 to $200,000 and the 45% rate (6% of taxpayers) will be over $200,000.
Expanded super for older Australians:
Older Australians will benefit from the work test exemption age being extended from age 64 to 66. The work test requires an individual to work at least 40 hours in any 30 day period in the financial year in order to make voluntary personal contributions. This change in age will now allow individuals aged 65 and 66, who previously didn’t meet the work test, to contribute three years of after-tax contributions in a single year, meaning up to $300,000 can be injected into an account with less than $1.6 million in super (tax-free pension threshold).
This adjustment aligns with the increase for the Age Pension from 65 to 67. Spousal contributions can now be made until age 74, up from age 65, without having to meet the work test. Under spousal contribution regulations, an individual can claim an 18% tax offset of contributions up to $3,000 made on behalf of a non-working partner. A further $3,000 can be contributed but with no tax offset.
Supporting the vulnerable
While the Budget has placed a strong focus on business and growth of the economy, the Government is also making sure to address the needs of those in the community who have faced hardships and fallen behind in recent years.
Farmers and farming communities affected by natural disasters and older Australians are among those being benefited.
Supporting the farming business
The Budget has put in place the mechanism to ensure that no single group will shoulder the burden of drought that is currently affecting farmers across much of Australia. There will be funding provided in drought assistance and concessional loans for farmers and farming communities, helping them to get through tough times and increasing access to income support through the Farm Household Allowance.
Supporting farmers in floods:
The recent floods devastating the Queensland farming community have created a need for the Government to assist the industry in restoring their vital contribution to the national economy and local communities. Flood-affected farmers will have access to up to $300 million in grants to help rebuild damaged farm infrastructure, replace livestock and replant crops. Along with the support provided to the farmers currently experiencing hardship, the Government will prepare for and mitigate the impact of future natural disasters by investing significant funding in new weather radars, the Future Drought Fund, and the creation of a new Emergency Response Fund.
Supporting older Australians:
Funding to the aged-care sector in 2019-20 has increased by more than 50% since 2013-14, and will allow older Australians to access more choices in better-quality and safer aged-care. For older Australians who wish to stay at home for longer, support will be provided through an additional 10,000 home care packages at all levels.
Keep an eye out on next emails which will discuss other news in respect of the 2019 Budget which will discuss PAYG Withholding Changes, GST Business VS Private, How Property Investors can get more back and a Business Growth Based Budget and more!