Australia has re-elected the Coalition government: what does it mean for you?
In the wake of an election, where it appears both parties were surprised by the results, we want to provide you some information about those last minute Coalition promises, and how they may affect you.
The Coalition are soon to be providing tax breaks for more than 10 million Australians by simplifying the current system, and removing the 37% tax bracket entirely.
In the process, the Coalition are planning to increase the 19% tax rate to $45,000 (previously $37,000) and they have also proposed reducing the 32.5% to 30% resulting in a flat 30% for anyone earning between $45,000 and $200,000.
Those earning $200,000 a year will get a tax cut worth $11,640.
See the below graph of what the proposed tax rates may look like.
Instant Asset Write-off
As part of the 2019 budget, businesses with a turnover of under $50 Million but more than $10 million can write-off assets against their taxable income. Previously, businesses turning over more than $10 million were excluded from the scheme.
The Coalition has also increased the threshold from $25,000 to $30,000. This is now legislation as of 2 April 2019. This is a significant increase in threshold from 2017 which gave a $20,000 instant write-off amount.
The Coalition have promised to lift the Medicare rebate freeze. This means Medicare payments to medical practitioners will increase to reflect what they say are rising costs associated with public care.
The Federal budget contained a $1 billion funding boost, including $448.5 million for GPs to better treat patients with chronic diseases, and investments in mental health. It will add 30 new Headspace Centres to the network, build new residential eating disorder treatment facilities nationally and take new measures to prevent Indigenous youth suicide.
First Home Buyers Scheme
The Coalition recently announced a First Home Buyers Scheme which allowed first home buyers to only supply a 5 per cent deposit and the government would make up the remaining 15 per cent.
This would result in first home buyers saving up to $10,000 by not having to pay lenders mortgage insurance. The scheme is limited to the first 10,000 homebuyers and for single people earning up to $125,000 or couples earning up to $200,000. This could offer an opportunity for the next generation of young Australians looking to purchase their first home. Keep in mind this does not limit itself to young Australians but anyone who has yet purchased their first home due to circumstances.
Key tax policies that are still intact
Many changes were proposed by the Labor party had they been elected, however with the return of the Coalition to Government, the key tax policies that are still in place are as follows:
You are still eligible to negatively gear
Individuals and trusts will still benefit from the 50% CGT discount for assets held greater than 12 months
Franking credits will still be refundable for individuals and super funds
Tax deductions are still eligible to be claimed on managing your tax affairs
The non-concessional contributions cap stays at $100,000 and will not be reduced to $75,000
The threshold for imposing an additional 15% tax on concessional contributions of high income earners will remain at $250,000 and will not be reduced to $200,000
Catch up concessional contributions are still allowed for individuals with a total superannuation balance of less than $500,000
Tax deductions are still allowed for your personal super contributions
A SMSF can still utiliise their fund to organize borrowing arrangement to acquire property
There will not be a standard minimum tax rate of 30% imposed on family trust distributions
Should you have any questions or want further information on how the election may affect you, please do not hesitate to contact one of our trusted advisors.