THE BONGIORNO (NSW) BUDGET SUMMARY
3rd April 2019
Last night, the Federal Government delivered a Budget for the country for the next four years. The Budget has been delivered one month earlier than normal in preparation for the upcoming Federal election.
Below is a summary of the key points which we think affect our clients. In summary, there are not many major changes that have an immediate impact and all of it is dependent on the election.
It must be noted, that the proposals contained in the Budget will have to be ratified by Parliament prior to the election being called to come into law.
SUPERANNUATION
The 2019 Federal Budget has proven to be a quiet affair for SMSFs and superannuation with the Government choosing to largely leave superannuation policy untouched except for a number of adjustments to existing policies or red-tape fixes.
TAX RATES
There is a phased reduction in tax rates over the next four (4) years. This has been achieved by increasing the thresholds at which tax applies. The benefit of these changes are for anyone who has a taxable income of less than $120,000
With the Government's announced changes, from 2024-25, there would only be 3 personal income tax rates – 19%, 30% and 45% (down from 5).
LOW INCOME TAX OFFSET
The measure was previously announced and was meant to commence on the 2019 tax returns. The amount of the offset has been increased. The minimum amount of the possible offset is $255 and the maximum amount of the offset is $1,080. It is means tested and applies to anyone who earns less than $126,000
The maximum benefit will flow to those with taxable income ranging from $48,000 to $90,000, but there is some benefit if your taxable income is below $48,000 or between $90,000 and $126,000
SMALL BUSINESS
The Small Business instant asset write off will be extended to 30 June 2020 and now include assets up to $30,000 in value.
THE ABN SYSTEM
From 1 July 2022, all ABN holders will be required to both lodge a tax return and to confirm the accuracy of their details on the Australian Business Register annually.
INSURANCE HELD WITH SUPERANNUATION FUNDS - YOU SHOULD NOTE:
For superannuation insurance policies, the Protecting Your Super Package requires that:
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On 1 April 2019, the trustee had identified insurance policies residing in accounts that have been inactive (i.e. no contributions or rollovers) for the previous 6 months;
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On 1 May 2019, the trustee notifies these identified members that their insurance cover will be switched off from 1 July 2019 if/when their fund has been inactive for 16 months and if they have not made an election to retain their cover since 8 May 2018; and
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From 1 July 2019, the trustee switches off cover in accordance with the above.
This means that if you are relying on some life insurance in your superannuation fund and that fund has been dormant for 16 months, the life insurance will be cancelled unless you make contributions or you contact your Fund and request the insurance stay in force.
SOCIAL SECURITY MEASURES
The Budget confirmed the Treasurer's announcement on 31 March 2019 that more than 3.9 million Australians will receive a one-off Energy Assistance Payment to help with their next energy bill and cost of living expenses.
The payment of $75 for singles and $125 for eligible couples ($62.50 for each member), who were eligible for qualifying payments on 2 April 2019 and who are an Australian resident, will be exempt from income tax and will be paid automatically before the end of the current financial year.
HEALTH
The freeze on Medicare rebates has been lifted effective 1 July 2019.
Beginning on July 1, the indexation of rebates for the remaining 119 general practitioner item numbers on the Medical Benefits Schedule will be reintroduced.
The government's backdown on the rebate freeze means all 176 GP items will now be indexed every year, along with those for specialists, while rebates on diagnostic imaging, such as X-rays and ultrasounds, will increase by $198.6 million from mid-2020.
A standard doctor's appointment currently attracts a rebate of $37.60 and is expected to go up about 60¢.
Practice Incentive Payments will be increased by an extra $201.5 million for doctors to improve the quality of the data they collect on patients' health to lift the standard of care.
It’s not all good news, as part of easing the burden on patients and to rein in health insurance premiums, specialists face being named and have their fees and estimated out-of-pocket costs publicly revealed.
Gynaecology, obstetrics and cancer services will be the initial target of a measure the government says will improve transparency.
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