With the federal election just around the corner, the recent Federal Budget’s proposed changes are by no means certain, but we assume they will be if the incumbent government is re-elected.
Individuals
1) There are proposed changes to personal income rates on the way with the low-income tier upper threshold shifting from $37,000 to $45,000 in 2023 - 2024.
| Rate | Current (2019 - 2022) | Proposed (2023 - 2024) |
| 0% | $0 - $18,200 | $0 - $18,200 |
| 19% | $18,201 - $37,000 | $18,201 - $45,000 |
| $32.5% | $37,001 - $90,000 | $45,001 - $120,000 |
| 37% | $90,001 - $180,000 | $120,001 - $180,000 |
| 45% | $180,001+ | $180,001+ |
2) There is even more good news for low-income earners with increases to the Low and Middle Income Tax Offset (LMITO). This is a calculated offset with a maximum deductible amount of $530. It’s important to note a tax offset only applies if you do actually pay tax.
3) Finally, the Medicare levy thresholds are increasing for low-income households across the board with singles, families seniors and pensioners all seeing an increase in the threshold that applies for them.
Business
The instant asset write-off continues to be popular and will be increased up to $30,000. The write-off is on a per asset basis so multiple assets can be written off. Small businesses (10 million or less) also continue to have access to the small business pool that allows them to depreciate assets worth more than $30,000 rapidly over the next two years. Medium (10 – 50 million) and larger businesses do not have this advantage and must depreciate assets costing more than $30,000 in accordance with the existing depreciation rates in the tax law.
Super Changes
1) Currently, people aged 65 to 74 years can generally only make voluntary super contributions if they satisfy the work test (ie: they are still working). However, the Government's proposed super changes will allow these people to continue to contribute to their super where they meet the following criteria:
- The member does not meet the work test in the contribution year.
- The member has met the work test in the previous income year.
- The member had a total super balance below 300K on 30 June of the previous year.
- The individual has not previously relied on the work test exemption to make contributions.
2) Those aged between 65 and 66 will now have access to the bring forward rule (without satisfying the work test). The bring-forward rule allows an Australian under the age of 65 to make up to 3 years’ worth of non-concessional contributions in one financial year, representing his or her annual non-concessional contributions cap over a 3-year period.
3) The age limit for spouse contributions has been increased up to the age of 74.