2019 Federal Budget
The federal budget has been announced ahead of the election with an estimated surplus of $7.1 billion, with increased surpluses in years to come. Labor has argued that this surplus is predominately due to good luck rather then good governing, I tend to agree with this statement to a degree. The $7.1 billion surplus is largely caused by a strengthening mining industry and jobs growth causing a surge in income. The coalition’s forecasted budgets rely on the continued growth within the mining industry and jobs growth.
In order to facilitate this, the government has announced measures to further support jobs growth which include a $525 million skills package to focus on new apprenticeships in areas where there are skills shortages. An exciting announcement is the new Female Entrepreneurs Program providing workshops to young Australian women to provide the skills necessary to start and operate small businesses. I support any measure that is going to empower young women and look to improve the gender wage gap.
The Coalition will also be passing on some of their increased revenue in the form of income tax cuts to middle income earners and small business. The 32.5% tax bracket is set to be reduced to 30%, in conjunction with the already legislated plans to abolish the 37% tax bracket, this will result in 94% of Australian’s paying no more then 30% tax. The low and middle income tax offset is set to increase starting in the current financial year should the coalition be re-elected. They have also announced that the small business income tax rate would be reduced to 25% and the instant asset write off cap will increase from $25,000 to $30,000 which means that small business will be able to claim tax deductions for larger purchases rather then depreciating them over a number of financial years.
There are plans to increase spending on roads, infrastructure and public transport to ease congestion around city centres. This may positively impact the housing market with concerns that Labor’s plan to scrap negative gearing may have adverse effects on real estate prices.
For those approaching retirement, the work test for super contributions will be extended from age 65 to 66, this means that anyone who is no longer working can continue to contribute to super until age 66. Centrelink pension recipients will be eligible for a one off energy assistance payment of $75 for singles or $125 for couples. It is a relief to hear that there won’t be any significant changes to superannuation and I think everyone will be looking forward to paying less tax. Hopefully continued strength in the mining sector and jobs growth can support the projected budget surplus.
If you have any questions regarding how the latest federal budget will impact you, don’t hesitate to contact me on 0423 313 486 or Kate@solacewealth.com.au.
