On Tuesday, 2 April 2019, Treasurer Josh Frydenberg handed down the 2019-20 Federal Budget. In an election Budget, the Treasurer announced the first Budget surplus in more than a decade at $7.1 billion for 2019-20
Frydenberg maintained a relatively optimistic outlook for the economy, though he conceded there were risks including from falling house prices and global risks such as Brexit.
The Government forecast full-year economic growth of 2.25% in 2018-19. Growth in the $1.9 trillion economy is seen picking up to 2.75% in 2019-20 and 2020-21. The tax cuts and increased spending, if enacted, could offer a boost to the economy, as consumer spending has been soft recently as falling home prices and high debt levels weigh on sentiment.
Financial markets have priced in a rate cut later this year.
The Government announced two main changes to deliver personal tax relief.
More than doubling the low and middle income tax offset up to $1,080 from 2018-19. Taxpayers earning up to $126,000 a year will receive this tax cut. The Treasurer said that for a single income family, this means up to $1,080 in their pocket per year and for families on a dual income, up to $2,160.
Lowering the 32.5% tax rate to 30% from 1 July 2024. This will cover all taxpayers earning between $45,000 and $200,000 and will mean that 94% of taxpayers will pay no more than 30 cents in the dollar.
The instant asset write-off has increased to $30,000.
Small business entities (ie those with aggregated annual turnover of less than $10 million) will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night (ie 2 April 2019) to 30 June 2020.
The instant asset write-off threshold will also be extended to apply to Medium businesses (ie those with aggregated annual turnover of more than $10 million but less than $50 Million ) however this will only apply up to 30 June 2020