RSM Australia

Individuals | Federal Budget 2019

How will the Federal Budget 2019 impact individuals?

Personal Tax
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The Government will lower taxes for individuals by building on its Personal Income Tax Plan (the Plan).

Immediate tax relief will be provided to low and middle-income earners, the flow-on effect will help maintain consumption growth in a slowing economy.

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As a result of the Plan, 94% of Australian taxpayers will have a marginal tax rate of 30% or less in 2024-25. The balance of the taxpayers, who earn over $200,000 per annum, will face the current top marginal tax rate of 45% (before the Medicare levy). Taxpayers on the top marginal rate will pay 10 times more tax than a person earning $45,000.

However, a person who earns $200,000 in 2024 will be materially better off under the revised tax brackets, together with the lower rates, with an overall tax saving of about $11,500. The 37% tax bracket currently applicable for taxpayers earning between $87,000 and $180,000 will be abolished.

For the current year to 2024-25, before the transition to the lower tax rates, a low-and middle-income tax offset (LMITO) will be implemented. The reduction in tax from this offset will increase from a maximum of $530 to $1,080, while the base amount will increase from $200 to $255 per annum for the 2018-19, 2019-20, 2020-21, and 2021-22 income years.

 

To receive the LMITO, an individual will be required to lodge a personal tax return, with the tax benefit arising on the processing of their personal return.

Income Threshold

2018-19 Maximum LMITO

2019-20 Maximum LMITO

Difference

$0 - $37,000

$200

$255

$55

$37,001 - $48,000

$530

$1,080

$550

$48,001 - $90,000

$530

$1,080

$550

$90,001 - $125,999

Reduced by 1.5c per $

Reduced by 3c per $

Reduced by 1.5c per $

> $126,000

Nil

Nil

Nil


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  • The Government will lower taxes for individuals by building on its Personal Income Tax Plan (the Plan). Immediate tax relief will be provided to low and middle-income earners, the flow-on effect will be to help maintain consumption growth in a slowing economy.

Single Touch Payroll

As part of the roll out of STP, the Government will have real-time access to the employment earnings of all employees.

The ATO will have employment income reported directly under STP and will share this information with the Department of Human Services (from 1 July 2019), allowing direct monitoring of welfare recipients.

This will enable the Government to ensure welfare payments are based on employees’ actual earnings, rather than estimates. This also beneficial for welfare recipients as they are less likely to receive overpayments which need to be repaid after the event. This measure is expected to achieve savings of $2.1 billion over five years.

 

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  • Increased focus on STP for social security purposes
  • Emphasis on introducing automated data matching system

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  • The Government

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Potentially income support recipients .

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AUTHORS

Jane Wood

Jane Wood
Associate Director, Tax Services