Treasurer Morrison based this budget around 5 key pillars being:

1. Income Tax Cuts;
2. Backing Business to Invest;
3. Providing Essential Services;
4. Keeping Australia Safe; and
5. A government living in its means.

The budget will be returning to a wafer-thin surplus of $2.2 billion in 2019/20 which is a year earlier than stated in the previous budget. This is attributable to the greater than expected revenue for the government in the best global economic conditions since the GFC which is driving a stronger Australian Economy.

Let’s move in to the practical outcomes for your everyday citizen:

INCOME TAX – The budget is predominantly based around a 7-year tax plan (or 3 elections) which is primarily targeted at the low to middle income earners. Let’s look at the impact of these changes over the next 2 years:

                                                                             1 July 18 to 30 June 19

The 32.5% tax bracket top limit is increasing from $87,000 to $90,000. Practical Impact: If you earn more than $90,000 a year, your tax saving is $135 a year or $2.59 a week.

                                                                             1 July 19 to 30 June 20

Individuals can now lodge there 2019 tax returns and reap the main tax benefit of the budget. In addition to the existing Low-Income Tax Offset (LITO), there will now be a secondary Low & Middle-Income Tax Offset. Practical Impact:

The new tax offset increases incrementally for those earning between $37,000 and $48,000, before the maximum offset of $530 is applied to those earning between $48,000 and $90,000.

The existing LITO will be increased by $200 for those who earn less than $37,000.

The liberal government have not touched the following controversial measures the labor government have been reviewing:

- Access to Negative Gearing on Investment properties;

- Access to Franking Credits on Dividends; or

- Tax Concessions on Capital Gains.

BUSINESS – The hugely popular $20,000 instant asset write off threshold has again been extended for a further 12 months until 30 June 2019 off the back of great success in stimulating small business investment.

WELFARE – Whilst there has been no increase to Newstart Allowance, Pensioners will be able to earn morning money without impacting their pension under the Pension Work Bonus Scheme.

Welfare frauds BEWARE. The government is looking to raise an additional $373 million by 2021 through increased data matching capabilities with the ATO.

SUPER – The government is pushing for people’s retirement funds to stop being eaten away by super funds by completing the following:

1. A 3% cap on fees where the fund balance is less than $6,000;
2. Abolishing exit fees; and
3. Proactively re-uniting people with their inactive super accounts where the balance is less than $6,000.

Individuals should all be checking they the status of their super fund/s to ensure you are avoiding unnecessary fees and insurance policies. You can check for your lost super by setting up a MY GOV account.

MEDICAL – The pharmaceutical benefits scheme to treat life-threatening conditions has been extended to 6 drugs related to cancer, HIV and multiple sclerosis.

An additional $338 million has been allocated to various mental health initatives including direct funding for support services such as Lifeline and SANE Australia.

Whilst there were other winners and losers in the federal budget, the other changes will not be felt by the everyday citizen.

What do you think? Let us know in the comments below!

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