At his first Budget speech Tuesday night, Treasurer Josh Frydenburg proclaimed that Australia is “back in the black” and is stronger since they came to government six years ago. This has allowed them to double the income tax cutbacks for millions of low and middle-income earners.
If re-elected, Mr Frydenburg stated that millions of Australians will profit from their increased tax cuts. Here’s what you can get.
For individuals who earn up to $18,200 a year, they will continue to pay no income tax.
Lower income earners that make $18,201 – $37,000 a year can expect to receive a $55 tax reduction in the 2019-2020 financial year. Considering the tax cuts that were already revealed last year, individuals within this income bracket will be granted a tax cut of up to $255 when compared to 2017-2018 levels.
Individuals who are in the $37,001 – $48,000 income bracket will get a tax break of $190. With the previous year’s tax cuts factored in, that equals to $480 in tax relief.
For those earning from $48,001 – $90,000 a year, they will receive a tax reduction of $550 which has doubled from last year. Factoring in last year’s tax cuts, single income earners will receive a maximum $1,080 in tax reduction based on 2017-2018 levels, while dual-income families will receive a maximum $2,160 cash back.
The majority of the tax cuts in this Budget are for the benefit of middle-income earners. Millions of Australians will benefit from this tax break which could be spent on their monthly mortgage payments, quarterly power bills, or yearly car insurance as Mr Frydenberg suggested.
Individuals who earn $90,000 per year can also benefit from the highest cut of $550. The amount of tax relief slowly decreases to zero for individuals who have a gross income of $126,000 a year. For instance, people who make $100,000 a year will get a $400 tax reduction, and for income earners who make $120,000 a year will get a $100 tax reduction.
Individuals within the $126,000 – $200,000 income bracket will receive no tax cuts in this Budget. Nonetheless, the government has plans to level out the tax rates which would mean significant tax cuts for high-income earners. The plan is to lower the marginal tax rate for those in the $37,001 to $87,000 income bracket from 32.5 cents in the dollar to 30 cents.
The current government also intends to take this a step further by removing the second highest tax rate of 37 cents by means of raising the 30 cents marginal tax rate threshold from $87,001 to $200,000.
As a result, there will be additional tax relief for all income earners between $45,000 and $200,000, which is 94% of all Australians. This also means that anyone earning between $45,001 and $200,000 would pay the same tax rate.
If the government is re-elected, the tax cuts will be provided in a lump sum “tax offset” in your annual income tax return starting 1 July 2019.
The Federal Budget 2019 also includes a plan of action to increase infrastructure spending to $100 billion over the next ten years. According to Mr Frydenberg, they will provide new infrastructure projects to help ease traffic congestion in the country, to open up new opportunities to all regions, to efficiently manage population growth, and to increase safety in our roads.
Drought recovery efforts
In addition, the Budget also features a major improvement for drought recovery initiatives, especially for regional areas that continue to struggle. Mr Frydenberg stated that the Morrison Government plans to expand the National Water Infrastructure Development Fund, establish the Future Drought Fund, extend the Farm Household Allowance, and support graziers through a new North Queensland Livestock Recovery Agency. They also plan to establish a $3.9 million Emergency Response Fund to ensure support of future natural disaster recovery efforts.
Training and education
Mr Frydenberg revealed a $525 million skills package in the hopes of creating 80,000 new apprenticeships along with double incentive payments to business owners in industries that are going through skills shortages. The government plans to work closely with industry to train Australians in the fields of communication technology, advanced manufacturing, health services, and in other areas of future high demand. In addition, a $453 million budget was announced to extend preschool education.
Also included in the Federal Budget 2019 is considerable funding for improvements to regional hospitals, starting in Townsville. According to Mr Frydenberg, they plan to open the first children’s cancer centre in the country in Sydney. They will also help build a new brain and spinal ward in South Australia. In addition, the Budget will list more medicines on the Pharmaceutical Benefit Scheme to treat kidney, liver, bladder, and skin cancer.
Once listed, medicines such as Besponza for acute leukemia, which currently costs around $120,000 per course, will be available for only $6.50 per script for concession card holders and $40 for general patients.
The Budget also plans to invest $461 million on mental healthcare which includes 30 new Headspace centres, indigenous youth mentoring and an emphasis on cutting waiting lists.
Elderly care will likewise receive a substantial investment of $725 million that includes 10,000 new Home Care packages.
National security and counter-terrorism will also receive a considerable boost in funding with agencies such as the Australian Federal Police and ASIO being given $570 million. Mr Frydenberg also said that they are allocating $680 million to support our service men and women deployed abroad. Furthermore, the Federal Budget also acknowledges the importance of supporting Australian veterans by adding $278 million invested in their last two Budgets to enhance the veterans and their families’ wellbeing.
If you would like to know more about how the Federal Budget 2019 will affect your personal circumstances, please contact your Chan & Naylor Client Manager.
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