Federal Budget Update – 2019 – 2020

On Tuesday night, the 2019/20 Federal Budget was announced, the highlights are set out below;

Further Decreases to Personal Income Taxes

  • The Low and Middle-Income Tax Offset (LMITO) will be changed to reduce the amount of tax payable; those earning under $37,000 will receive an offset of $255 up from $200, income earners between $37,001 and $48,000 will receive $255 plus 7.5% above $37,000, the offset will increase from $530 to $1,080 for people earning between $48,001 and $90,000 and will gradually phase out up to a maximum threshold of $126,000.
  • From 1st July 2022, the top threshold of the 19 per cent tax bracket will increase to $45,000 (up from $41,000).
  • The Low Income Tax Offset (LITO) will increase to $700 (up from $645) from 1st July 2022.
  • From 1st July 2024, the 32.5 per cent marginal tax rate will be reduced to 30 per cent.
  • From 1st July 2024, the 37 per cent tax bracket will be abolished.

Changes to the Instant Asset Write Off

  • The threshold for the instant write-off will be increased to $30,000 (up from $25,000).
  • The Instant Asset Write Off will be extended for another twelve months up until 30th June 2020.
  • Medium sized businesses (with aggregated turnover between $10 million and $50 million) will also be able to immediately deduct purchases of eligible assets costing less than $30,000 purchased after budget night (2nd April 2019) (they wont have access to small business pooling).
Asset first used or installed ready for use Small Business (turnover less than $10 million) Medium Business (turnover between $10 million and $50 million) Large Business (turnover greater than $50 million)
1st July 2018 to 28th January 2019 $20,000 N/A N/A
29th January to 2nd April 2019 (budget night) $25,000 N/A N/A
2nd April (budget night) to 30th June 2020 $30,000 $30,000 N/A

Medicare levy low-income thresholds will be increased for the 2018/19 year

  • Individuals $22,398 (increased from $21,980).
  • Families $37,794 (increased from $37,089) plus additional $3,471 for each dependent child (increased from $3,406).
  • Single seniors and pensioners $35,418 (increased from $34,756).
  • Family seniors and pensioners $49,304 (increased from $48,385) plus additional $3,471 for each dependent child (increased from $3,406).

Storm affected Primary Producers in Queensland

Payments to primary producers in the Fassifern Valley, Queensland affected by storm damage in October 2018 will be treated as exempt income.

Income Tax exemption for North Queensland flood grants

An income tax exemption will be provided for qualifying grants made to primary producers, small businesses and non-profit organisations affected by the North Queensland floods.

Requirements for Australian Business Number holders

Australian Business Number (ABN) holders will be required to lodge their Income Tax Return from 1st July 2021 and confirm the accuracy of their details on the Australian Business Register annually from 1st July 2022 to retain their ABN status.

Div 7A amendments

The start date of amendments to Div 7A will be delayed by 12 months to 1st July 2020.

Superannuation Contributions allowed for 65 and 66 year olds

From 1st July 2020, Australians aged 65 and 66 years of age will be able to make voluntary contributions (both concessional and non-concessional) without having to meet a work test.

Spouse Contributions Tax Offset Eligibility Extended

Restrictions on claiming the spouse contribution tax offset will be eased from 1st July 2020 allowing spouses aged 70 to 74 years of ago eligibility if they meet the work test.

Exempt Current Pension Income Calculations

The calculation of exempt current pension income (ECPI) will be simplified for Superannuation Funds from 1st July 2020, allowing trustees to calculate ECPI on a preferred basis.

Expansion of Super Stream

From 31st March 2021, Super Steam is to be expanded to enable the ATO to send electronic requests to superannuation funds for the release of money from a member’s account and to be used with rolling over money from one Fund to another.

Increased Luxury Car Tax refunds for primary production and tourism operators

For vehicles acquired on or after 1st July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000.

Energy Assistance Payment

A once off Energy Assistance Payment of $75 for singles and $62.50 for each member of a couple eligible for qualifying payments on 2nd April 2019 who are residents of Australia will be made. Qualifying payments are the Aged Pension, Carer Payment, Disability Support Pension, Parenting Payment Single, the Veterans Service Pension and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 and the Safety, Rehabilitation and Compensation Act 1988.

Social Security payment reporting to be verified by Single Touch Payroll

Individuals who receive income support payments from DHS will have their reported income matched with Single Touch Payroll reports from 1st July 2020.

Family Benefit extended to ABSTUDY students away from home

Family Tax Benefit eligibility will be extended to the families of ABSTUDY (secondary) student recipients who are aged 16 years and over, and are required to live away from home to attend secondary school.

Income from forced sale of livestock invested into Farm Management Deposits

From 1st July 2019, net income generated from the forced sale of livestock will be exempted from the Farm Household Allowance (FHA) payment assessment, when that income is invested into a Farm Management Deposit

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