Tax cuts for low to middle income earners and significant spending on infrastructure projects are some of the key proposals in this year’s Federal Budget.
The Government also announced several changes to super aimed at helping older Australians to make additional contributions to their super.
Compared to previous budgets, the super changes are modest with little impact on most members. Keep in mind also that the changes announced will need to be legislated and, with a Federal election around the corner, there is no certainty that they will be implemented.
The following budget summary has been prepared with the support of the Australian Institute of Superannuation Trustees (AIST).
The tax cut proposals are designed to be implemented over a five year period with three key start dates:
- Commencing immediately, there will be an increase to the low and middle income tax offset providing up to $1080 for singles and up to $2160 for dual income families.
- From 2022/23, there will be an increase in the income tax threshold for the 19 per cent tax rate from $41,000 to $44,000 plus an increase in the low income tax offset from $645 to $700.
- From 2024/25, there will be a decrease in the 32.5 per cent tax rate to 30 per cent for Australians earning between $45,000 and $200,000
- Members aged 65 and 66 years will be able to make voluntary concessional and non-concessional super contributions, without meeting the work test.
- The ‘bring-forward’ rule, which currently allow those aged less than 65 years to make three years’ worth of non-concessional contributions in one year will be extended to those aged 65 and 66. This will allow those members to make voluntary non-concessional contributions of up to $300,000 in a single year.
- Members will also be able to make voluntary contributions for a spouse up to age 74, up from the current cut-off of 69 years.
Small to medium business will see the instant asset write-off threshold increase from $25,000 to $30,000 and made available to companies with an annual turnover of up to $50 million.
Tax cuts for small and medium businesses have also been fast-tracked and will come down from 27.5 per cent to 26 per cent next year and 25 per cent starting in 2021.
$100bn infrastructure spend
The government has pledged a $100bn, 10-year spend on infrastructure projects including road and rail. Around $42bn is allocated for spending in the next four years.
The Government is proposing a one-off Energy Assistance Payment of $75 for single pensioners and $125 for couples. The payment would be made this financial year at a cost of $284 million.