Australian Treasurer, Scott Morrison recently released our third budget which will result in number of changes if the Liberal Party are re-elected next year and the budget is in fact implemented. The changes aim to put the Government in surplus for the first time since 2008 but this does not necessarily mean significant cuts. In fact, the majority of middle-class working Australians are set to benefit from the new budget. Below is a rundown of how the new budget might affect you:
Taxation
The government is planning to reduce taxation for lower and middle-income Australians and families by increasing the taxable threshold income for low-income tax offset (LITO) from $66,667 to $90,000. This means that more Australians will be taxed less.
A limit on cash payments will be introduced with the new budget in an attempt to crack down on those attempting to avoid tax payments. From July 2019, there will be a limit of $10,000 for cash payments for goods and services. It is anticipated that this limit, along with a Taskforce dedicated to targeting areas of under-reported income, will result in an additional $5.3 billion dollars of tax coming into the budget over the next 4 years.
Pensioners
$227 million dollars has been allocated to the Pension Work Bonus Scheme which allows pensioners to earn more money without incurring any deductions to their pension amount received. Pensioners will also be able to mortgage their home under the Pensions Loan Scheme.
Welfare Recipients
Unfortunately, welfare recipients will be adversely affected by the new budget with the government aiming to save $373 million by cutting welfare payments. Additionally, the government is increasing the waiting period from 3 years to 4 years for new migrants attempting to obtain welfare benefits. This will likely save another $200 million dollars.
Superannuation
In order to maximise superannuation funds available to working Australians, the government plans to introduce a 3% cap on fees for any account that has less than $6,000 in it. It is very common for individuals to accumulate a number of different superannuation funds over their work lifetime which may be confusing and difficult to keep track off. The government is planning to introduce an initiative where all inactive accounts with less than $6,000 will be transferred to the ATO to be ‘reunited’ with owners.
Mental Health
The government intends to increase funding for mental health services by $338 million dollars, focusing specifically on suicide prevention, research, and accessibility for rural and older Australians. This will include more support for people discharged from hospital following suicide attempts, and more funding for hotline services and awareness campaigns.
Small Businesses
In the 2015-26 budget, the Government introduced an Instant asset write-off initiative where business owners could write off up to $20,000 for any asset purchases they had bought and used, or installed to use in that year. The new budget has extended this initiative for another 12 months until 30 June 2019.
Road Congestion
The government has allocated $24.5 billion dollars to transport projects with the aim of reducing congestion. This includes work on roads and rail. As well as potentially decreasing our morning commute times, these projects will generate hundreds of new jobs.
Independent Students
If you are a student from a regional or rural area of Australia, who is living away from home to study at university, the new budget will make access to Youth Allowance payments easier. These payments are based on the income of the student’s parents. By increasing the threshold amount of parental income to $160,000, more students will be eligible for these payments.
Medical Assistance
Treatment and medication, especially for life-threatening, can be extremely expensive. To combat some of these costs, the government is adding $1.4 billion dollars to the budget over the next 4 years. This will be targeted at medication for a number of illnesses including relapsing-remitting multiple sclerosis, spinal muscular atrophy, and breast cancer.
As well as this, the Government is focusing on increasing access to doctors to those in rural areas by introducing 5 new medical schools in the Murray-Darling region, and creating a new junior doctor training program in remote regions. An additional $84 million dollars will go to the Royal Flying Doctor Service who will begin delivering dental and mental health services for the first time.
Security
The government is setting aside money in the budget to ensure the safety of Australians. This will include strengthening airport security, managing biosecurity risks from the import/export of agriculture, and continuing Operation Sovereign Borders, an initiative introduced to combat people smugglers.
If you have any questions regarding the budget, please do not hesitate to contact us on (02) 8917 8700. Alternatively, visit the visit the Australian Government’s Budget website at https://www.budget.gov.au/index.htm.