On 2 April, the Government released the Federal Budget for 19/20.
Below are the key takeaways that may be relevant to you and your group:
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Deferral of the implementation of the new Div 7A and UPE rules to 1 July 2020.
The deferral is important as the rules were due to commence 1 July 2019.
The budget states that the delay will allow for further industry consultation, and consideration of transitional arrangements.
However, the budget provides no update on how the new rules will apply, with the most recent information available being the Treasury consultation paper which was released October 2018.
These proposed new rules once legislated will impact most family groups who run small businesses and we’ll continue to keep you updated on the status.
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Extension of the instant asset write off for small and medium businesses:
Assuming legislation announced prior to budget night is passed, as well as the budget night updates, eligible depreciable assets can be immediately written off as follows:
| Small Business (less than $10m turnover) | ||
| Date from | Date to | $ threshold per asset available for immediate write off |
| 1/7/2018 | 28/1/2019 | $20,000 |
| 29/1/2019 | 1/4/2019 | $25,000 |
| 2/4/2019 | 30/6/2020 | $30,000 |
| Medium Business (between $10m & $50m turnover) | ||
| Date from | Date to | $ threshold per asset available for immediate write off |
| 1/7/2018 | 1/4/2019 | N/A |
| 2/4/2019 | 30/6/2020 | $30,000 |
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Doubling low and middle income tax offset:
Offset increased to $1,080, and will apply during 4 tax years, starting from the current financial year (2019), and ending 30 June 2022.
The full benefit of the $1,080 will be received if personal income is between $48k and $90k, then phasing out up to $126k.
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Personal tax rate cuts:
The personal tax rate reductions while announced, will not apply for some time.
The key changes are:
- 1 July 2022 – 19% bracket increase from $37k to $45k (was originally due to increase to $41k)
- 1 July 2022 – 32.5% bracket increase from $90k to $120k (this was from prior budget)
- 1 July 2024 – 32.5% bracket increase from $120k, to $200k (previously announced), with tax rate reducing to 30% (new announcement)
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$1b additional funding to the ATO for compliance activity
Additional funding to the ATO over the next 4 years.
Compliance activity will target:
- Large public and private groups
- Trusts and HNW individuals
- Multinationals
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Superannuation announcements:
Only minor announcements relating to super this year:
- Super contributions work test exemption extended to age 66 from 1 July 2020
- Simplify calculation of exempt pension income
- Rollovers from SMSF’s required to use Super Stream standard from 31 March 2021
If you have any questions on how the recent budget announcements could affect your group, please contact us.
