In short, simplification. The LNP has committed to a simpler tax system and propose a reduction in income tax starting 1 July 2019 and into 2024. Assuming these are rolled out in their entirety these changes will remove the 37% tax bracket entirely:
- Stage 1: From July 1, 2018, the Government gave a tax cut of up to $135 per year to about 3 million people by increasing the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000
- Stage 2: From July 1, 2022 the top threshold of the 32.5 per cent tax bracket will be increased from $90,000 to $120,000, providing a tax cut of up to $1,350 per year for taxpayers in this income bracket and above
- Stage 3: From July 1, 2024, the Government will increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000, removing the 37 per cent tax bracket completely.
Tax offsets will also come into effect in the 2019FY, with those earning less than $37,000 receiving an offset of up to $255 with their tax returns this year. Those with assessable income between $48,000 and $90,000 will receive up to $1,080.
Small business – instant asset write-off
The instant asset write-off threshold has increased to $30,000 for each asset from 7.30pm (AEDT) 2 April 2019 and the instant asset write-off has been extended to 30 June 2020.
If you are a small business (with a turnover of less than $10 million), you can immediately deduct the business portion of most assets that each cost less than $30,000 (the instant asset write-off threshold) if they are first used or installed ready for use from 7.30pm (AEDT) 2 April 2019 to 30 June 2020.
However, if the asset was first used or installed ready for use from 29 January 2019 until 7.30pm (AEDT) 2 April 2019 you can still immediately deduct the business portion of most assets costing less than $25,000 each. Before 29 January 2019 the relevant threshold is $20,000.
Businesses with a turnover from $10 million to less than $50 million may now be eligible for the instant asset write-off for assets purchased for less than $30,000 each from 7.30pm (AEDT) 2 April 2019 to 30 June 2020. For assets purchased for $30,000 or more, the general depreciation rules must be used.
As the dust settles on the 2019 Federal election and the country prepares for 3 more years of LNP leadership, we will bring all new and updated tax policies to your attention. Now is the time to gain a better understanding of how these changes will impact your household budgets, take steps to maximise how the changes effect your salary packaging and develop a strategy to ensure the additional income is working for you, towards the prosperity your desire.
At CXC Financial Partners we understand that paying the right amount of tax and not a cent more means more disposable income in your pocket. Our accountants will ensure you’re doing just that AND help structure your accounts and/or business to maximise your income. Additionally, when you use CXC myVAULT to automatically collate your expenses, your time in managing your tax records is minimised, freeing you up to focus on what what’s really important to you.
Give the team a call and re-discover your freedom. The Accounting team are on 1300 925 081 or firstname.lastname@example.org