Central Coast Accountants

What may or may not be covered under the 2019 Federal Budget?

Published on April 26, 2019 at 12:00 AM

It seems a lot of information to cover, however all these topics are carefully intermingled in our current economic environment.

What do we know of what may or may not be covered under the 2019 Federal Budget?

1.An increase in low and middle income tax offsets of some amount will probably occur.

2.Instant asset write-off has increased to $30,000 and expanded to businesses under $50 million turnover, giving us three thresholds for the financial year ended 30 June 2019.

Instant Asset
Write-Off Thresholds
Small Businesses under $10 million turnoverBusinesses under
50 million turnover
1 July 2018 to 29 January 2019$20,000-
29 January 2019 to 2 April 2019$25,000-
2 April 2019 to 30 June 202030,000$30,000

This is excellent for the business community and will assist in tax deductions, providing businesses have the cashflow or ability to finance these assets.

3.Superannuation rules have changed in respect of the work test for individuals aged 65 and 66.

4.Tax rates are proposed to be cut. However I have not considered the detail as the possibility of this legislation changing, commencing from 1 July 2022, is highly unlikely.

What about the Opposition Budget Reply?

1.Labor has of course said that any future tax cuts will not be passed as this will amount to frivolous spending and make the rich richer.

2.Labor proposes budget income be generated by stopping any franking credits excess for individuals as we have to stop “gifting” money to wealthy individuals.

The current legislation has been law for considerable time and retirees have planned for the last 10 to 20 years for their retirement based on these rules. Labor considers most of the people that are able to avail themselves of this legislation are rich, so it is okay to tax the rich.

3.Labor has also proposed cutting the exemption rate for Capital Gains from 50% to 25% on the basis that only rich people use Capital Gains Tax exemption.

4.Savings from these proposals will be spent on Health advancement, a great cause, but at what cost to a certain section of taxpayers

The reality is that these proposals require approval by a majority of senators who continue to sit after the upcoming elections, and it is unlikely, based on the senators current stance that any of these proposals will pass parliament.

The Upcoming Election

We, as taxpayers, continue to be bombarded with proposals by both parties, fully knowing that the majority of these proposals will never see the light of day.

Each party has experts reporting on a daily basis that their information is correct, only to have another report issued the next day by another so called “expert” disproving the previous days report.

We continue to live in an environment where we distrust anything that comes out of the mouth of any politician on either side.

We have seen the unions grow stronger over the last five to ten years with some unions taking the stance that any unlawful action is acceptable because we are fighting for the union members and anything goes.

If unions achieve increases in wages, the livelihood of the country and small business will be faced with a decision to either lay off staff or close down all together, as substantial wage increases will have a marked effect of the viability of any business.

Since the Global Financial Crisis, small businesses have seen generally flat sales with increased costs and a shrinking profit margin.

Labor contends that the rich get richer so it is only fair that they pay more tax. However, there are some pundits who say that it is fairer that everyone is poor, but what sort of Country will that change Australia into is anyone’s guess.

It is assumed that based on the current poll figures, Labor will be elected. However, whether anything will change remains to be seen.

As an tax Accountant, I will leave you with the current notion proposed by Labor that all Accountants are involved in “rorts” by allowing millions of dollars in deductions to be claimed by wealthy individuals, so only a claim for $3,000 is allowable for tax purposes.

Of course, it is only fair and if we put off employees and ultimately close our business, we can join the rest of the poor workforce.