Federal Budget 2019/20

Delivered 2 April 2019 by Treasurer Josh Frydenberg

We have prepared a summary of last night’s federal budget as a general broadcast to our clients and anyone else who might be interested.

 

Only the main points of the budget are in this document. These are the changes that we believe will be of interest to most readers.

 

This has been prepared as an easy to read document for general information only. No part of this document should be relied upon. Please contact us for advice that will be specific to your situation.

 

Remember these announcements are exactly that, announcements. None of this is actual law until passed through parliament.

 

Please have a read and feel free to pass this onto anyone who might be interested.

 

Yours sincerely,

Lachlan Stephenson B.Com C.A., SSAud.

Phill Ezquerro B.Com C.A., C.T.A

Directors,

Shellharbour Accounting and Business Advisers

Introduction:

Of course, unless you have been living under a rock, you would know there is a federal election will be held sometime in the next 8 weeks. So will tonight be an opportunity to buy votes in key electorates or will is it a normal budget with the government assuming they will be in power after this election.

 

Treasurer Josh Frydenberg has announced Australia is “Back in Black” (classic AC/DC song) for next financial year. He recognises that global economy is slowing, increased local pressures for floods and fires, and also recognises that wages growth has not been as good as it should be.

 

His answer to all this, a strong economy that can withstand any external factors – without raising taxes.

 

Please remember that due to the election looming, most of these measures will only be in play IF the coalition is re-elected in this election. If Labor win the election they will likely have a completely different strategy.

Economic situation:

Australia to be out of government debt by 2030. Why is this important? Australia’s interest bill in 2018/19 is $18 Billion. Money that could be better spent elsewhere.

Personal income tax:

Below is the new table of personal income tax rates including Medicare showing rates for next financial year compared to the proposed rates from 2024/25:

However, from 2019 tax return, assuming the coalition are re-elected, a refund via a rebate will be increased compared to last year’s announcement working like this:

Interesting statistics:

Main sources of income for 2019/20:

  • Individual income tax $228 Billion
  • Company income tax $99 Billion
  • Sales taxes $69 Billion
  • Fuel excises $21 Billion
  • Customs Duty $21 Billion
  • Other $67.5 Billion
  • Total Government Revenue $505.5 Billion

Main areas of expenditure are:

  • Social Security and Welfare $180 Billion (35.6% of revenue)
  • Health $82 Billion (16.2% of revenue)
  • Education $36 Billion (7.1% of revenue)
  • Defence $32 Billion (6.3% of revenue)
  • Other purposes $168.4 Billion.

Small and Medium Business:

The main measure for small/medium business is to extend the instant asset write off from $25,000 to $30,000 available from 19.30 02/04/2019 AEDT. That is, now.

 

The number of businesses who can access this measure has increased to any business with a turnover (ie sales) of less than $50 million per annum. This equals around an extra 22,000 business able to access this measure.

 

Therefore, a business who qualifies and purchases a (for example) Van for $28,000 and operate under a company they will save $7,700 in income tax in that financial year.

Tax avoidance:

Extending the funding to the ATO to expand the tax avoidance taskforce providing over $1 Billion to this.

Infrastructure:

A total of $100 Billion over the next 10 years. This includes:

Road Safety package totalling $2.2 Billion. The highlights of this package are $1.1 Billion on vital road repair, $550 million on increased funding on black spot programs and $571 million for bridge renewals and safety.

 

Urban Congestion spending – $4 Billion on projects to ease congestion in some of the country’s worst affected urban areas.

 

Commuter Car Park fund – $500 million to establish a fund to assist taking 10,000’s of cars off the roads by providing car parks at public transport hubs.

 

It appears there will be more announcements on infrastructure spending during the election campaign.

Environment:

A climate solutions package costing $3.5 Billion.

 

On top of this there is money set aside for Drought, Flood and Emergency Response funds, the budget allows for:

Drought support fund – $6.3 Billion

Emergency Response fund – $3.9 Billion.

Flood support fund – $3.3 Billion

Health:

A total of $82 Billion to be spent on health in 2019/20. As part of this:

 

Medical future fund costing $20 million.

 

Genometrics research to unlock the secrets of human DNA costing $400 million.

 

Youth Mental Health spending of $461 million including 30 more headspace centres and other measures.

 

More medicines available on the PBS including an expensive Leukaemia treatment.

 

Help for carers, $84 million to allow carers some help to allow the carer to have a break from their duties.

 

NDIS – $22 Billion to fund NDIS.

 

Age care – 10,000 Home care packages costing $725 million. There will also be a one off $75 for single and $125 for couple pensioners to assist with energy costs.

Education:

A further extension to preschool education programs, targeting children to attend minimum 15 hours of preschool in the year before Kindergarten, costing $453 million.

 

New local school community program. Allowing communities greater input into their local schools costing $30.2 million.

 

Investment of $17.7 Billion into the university sector to commit to a world class higher education system.

Safety:

The government has announced significant spending on “safety”.

 

A comprehensive drug strategy costing $337 million.

 

Greater funding to ASIO now totalling $570 million, helping to ensure Australia’s security.

 

Assistance to armed forces personnel currently overseas costing $680 million. As well as adding $278 million to the funding the improved wellbeing of veterans and their families.

 

Women’s safety measures costing $328 million. Including domestic violence measures.

 

Safer communities fund for security in many areas especially in schools and churches.

Conclusion:

The treasurer announced about 12 times in his speech, although it seemed to be about 298 times, that the Coalition is returning the budget to surplus without raising taxes, especially through Labor’s plans of denying franking credit refunds, denying negative gearing deductions in certain circumstances, increasing tax on investment gains, taxing discretionary trust distributions at 30% and denying tax cuts proposed by the coalition.

 

Now bring on the election campaign with Coalitions war cry of “we are not increasing taxes”. That’s just my prediction.

 

I appreciate the time you have taken to read this.

 

Have a great day!

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