With the 2019 federal budget being delivered last night by Treasurer Josh Frydenberg, we’ve put together some of the key takeaways.

Unsurprisingly this is a budget with plenty of election promises and spending, with the date of the election to be announced shortly for May.

The opposition leader will provide his response to the budget this Thursday, so we will know more about the measures and likelihoods of them passing as well.

We remind you that at this stage everything mentioned is merely a proposal and may not make it into legislation – especially items not supported by the opposition. Furthermore, the upcoming federal election means there is even more uncertainty about what proposals will make it into law.

For you

Right Now
  • The low and middle income offset (LMITO) will be increased. This means if you earn between $37k and $126k you will receive up to an extra $550 when you lodge your next income tax return, with the maximum offset applying to those earning between $48k and $90k.
  • The government will provide a payment of $75 for singles and $125 for couples who are eligible for certain social security payments, to provide assistance with rising energy bills.
  • For the next five years, apprentices in certain industries will receive a payment of $1,000 at the end of 12 months, and then a further $1,000 upon completion of their apprenticeship.

The industries included will be reviewed and may change at the end of each year.

In the future
  • From 1 July 2022, individual income tax rates are proposed to be changed. This means a lower tax rate for those earning under $45k, and then from 1 July 2024 a lower rate for those earning between $45k and $200k. Ultimately this is aimed at simplifying our tax system and bringing Australia in line with the rest of the world.
  • From 1 July 2020, you’ll be able to contribute to super without satisfying additional work tests up until the age of 67 (where the cut-off was previously 65).

For business

Right now
  • The small business ‘instant asset write-off’ has been extended for a further 12 months and been expanded to include medium sized businesses (earnings of $10million – $50million).

In addition, the asset write-off limit has been increased to $30,000 as of budget night.

  • Employers in certain industries who employ apprentices will receive a payment of up to $8,000.
  • There will be increased focus on inappropriate use of contractors or “sham contracting” in business (where contractors are in reality just employees).
In the future
  • Company tax rates for businesses with a turnover of less than $50million will be reduced earlier than originally planned.
    • 2019 & 2020 Financial Year will stay at 27.5%
    • 2021 Financial Year will decrease to 26%
    • 2020 and onwards will decrease to 25%
  • From 1 July 2021 anyone with an ABN must lodge a tax return.
For everyone
  • The government has ramped up funding to the ATO to increase activities to recover unpaid tax and superannuation liabilities. This includes large injections ($1 billion over 4 years) to the Tax Avoidance Taskforce which undertakes compliance activities targeting multinationals, large public and private groups, trusts and high wealth individuals.

If you have any queries or are unsure about anything included, please contact your adviser at CHN Partners to discuss this further.


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