The Budget is “Back in the black”, Mr Josh Frydenberg announced as he handed down the 2019/20 Federal Budget, with a surplus of $7.1b, on 2 April 2019.

The budget focuses on “restoring the nation’s finances”, further strengthening the economy to create more jobs and to “guarantee the essential services”. The tax, superannuation and social security highlights are set out below.

Income tax

  • Individuals will benefit with the lower taxes, including changes to the low and middle income tax offset (LMITO), the low income tax offset (LITO) and the personal income tax rates and thresholds.
  • The instant asset write-off threshold for businesses with an aggregated turnover of less than $50m (increased from an aggregated turnover of less than $10m) will be increased to $30,000 for eligible assets that are first used, or installed ready for use, from 7.30 pm (AEDT) on 2 April 2019 to 30 June 2020.
  • The Medicare levy low-income thresholds for singles, families, seniors and pensioners will be increased from the 2018/19 income year. The threshold for singles will be increased to $22,398 (up from $21,980 for 2017-18). For couples with no children, the family income threshold will be increased to $37,794 (up from $37,089 for 2017-18). The additional amount of threshold for each dependent child or student will be increased to $3,471 (up from $3,406).

For single seniors and pensioners eligible for the SAPTO, the Medicare levy low-income threshold will be increased to $35,418 (up from $34,758 for 2017-18). The family threshold for seniors and pensioners will be increased to $49,304 (up from $48,385), plus $3,471 for each dependent child or student.

Tax integrity and black economy

  • Currently, ABN holders are able to retain their ABN regardless of whether they are meeting their income tax return lodgment obligation or the obligation to update their ABN details.

Accordingly, from 1 July 2021, ABN holders will be required to lodge their income tax return and confirm the accuracy of their details on the Australian Business Register annually to retain their ABN status.

  • The ATO will receive funding to increase activities to recover unpaid tax and superannuation liabilities with a focus on large businesses and high wealth individuals.
  • A dedicated sham contracting unit will be established within the Fair Work Ombudsman to address sham contracting behaviour by some employers.

Indirect taxes

  • For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000. Currently, primary producers and tourism operators may be eligible for a partial refund of LCT paid on eligible 4-wheel or all-wheel drive cars, up to a maximum refund of $3,000. The eligibility criteria and types of vehicles eligible for the current partial refund will remain unchanged under the new refund arrangements.

Superannuation

  • Members of regulated superannuation funds will not have to meet the work test after 1 July 2020 if they are 65 or 66 years of age. The proposed change will align the work test with the eligibility for the Age Pension, which is scheduled to reach age 67 from 1 July 2023.
  • The restrictions on claiming the spouse contribution tax offset will be eased from 1 July 2020, giving 70 to 74 year old spouses eligibility. Currently, those aged 70 and over cannot receive contributions made by another person on their behalf.
  • The calculation of exempt current pension income will be simplified for superannuation funds from 1 July 2020, allowing a preferred method of calculation and removal of some actuarial certificates.
  • Transitional tax relief for merging superannuation funds will become permanent from 1 July 2020. This was originally date that the relief was due to expire.
  • SuperStream will be expanded from 31 March 2021 to include electronic ATO requests for release of superannuation funds and SMSF rollovers.
  • An expression of interest process will be undertaken to identify options to support establishment of a Superannuation Consumer Advocate.

 Social security

  • There will be a one-off Energy Assistance Payment of $75 for singles and $62.50 for each member of a couple eligible for qualifying payments on 2 April 2019 and who are resident in Australia. Qualifying payments are the Age Pension, Carer Payment, Disability Support Pension, Parenting Payment Single, the Veterans’ Service Pension and the Veterans’ Income Support Supplement, Veterans’ disability payments, War Widow(er)s Pension, and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 (including dependent partners) and the Safety, Rehabilitation and Compensation Act 1988.
  • Single Touch Payroll reports lodged by employers will be shared with social security agencies from 1 July 2020. This measure will assist income support recipients by greatly reducing the likelihood of them receiving an overpayment of income support payments (and subsequently being required to repay it).

The Government says the efficiencies from this measure will be derived through more accurate reporting of incomes. This measure will not change eligibility criteria or maximum payment rates. The resulting efficiencies will be redirected by the Government to repair the Budget and fund policy priorities

  • Family Tax Benefit eligibility will be extended to the families of ABSTUDY (secondary) student recipients who are aged 16 years and over, and are required to live away from home to attend secondary school.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.