Personal income tax plan
The Government announced an introduction to amend the legislated personal income tax plan.
· Amendment to the low and middle income tax offset, increasing the amount of the offset available to eligible individual tax payers in 2018-19 to 2021-22.
· Increase in top threshold of the 19% tax rate to $45,000 from $41,000 as of 1 July 2022
· Increase in low income tax offset from $645 to $700 as of 1 July 2022
· Reduction of marginal rate to 30% from 32.5% from 1 July 2024
Increasing the Medicare levy low-income threshold
The government announced an increase in the Medicare levy low-income threshold from the 2018-2019 financial year.
The threshold will increase as follows:
· singles – from $21,980 to $22,398
· families – from $37,089 to $37,794
· single seniors and pensioners – from $34,758 to $35,418
· families – seniors and pensioners – from $48,385 to $49,304
· each depend child/student – from $3,406 to $3,471
Increasing instant asset write-off
Increase in the asset write off threshold to $30,000 from $25,000, in addition the proposed change will apply to medium sized business (turnover of $10 million or more but less than $50 million). The increase in threshold applies to assets first used or installed ready to us from 7.30pm on 2 April 2019 until 2020. The previously announced change to SBEs to increase the threshold from $20,000 to $25,000 will still proceed on assets installed and ready to use from 29 January 2019 until 7.30pm 2 April 2019.
Delaying the start date of Division 7A amendments
Delaying the start date of the proposed amendments of Div7A by 12 months, this will allow the government additional time to further consult with stakeholders. The deferred start date of the proposed amendments for the amended Div7A will be 1 July 2020 (previously 1 July 2019)
Reduction of Small Business Company Tax Rate
Scheduled cuts to the company tax rate to 25% will be brought forward for businesses with turnover below $50 million. The tax rate change will be effective from the 2021/22 financial year.
No tax cuts will be available for companies with turnover above $50 million as per the Government’s August 2018 announcement.
Superannuation Super Contributions – work test for retirees
It is proposed that from 1 July 2020 that individuals aged 66 and 67 will be able to make voluntary super contributions without having to meet the work test.
The work test requires that an individual aged between 65 and 74 works at least 40 hours in a 30 day period in order to make contributions.
The Tax Act is to be amended to allow individuals aged 65 and 66 to use the bring forward rules for non-concessional contributions. This will allow some individuals to make 3 years of non-concessional contributions in a single year that is $300,000.
If you have questions please feel free to call Melbourne Tax Advisory 1300 942 230.