We’ve gotten pretty well acquainted with Josh Frydenberg this past week. The treasurer has spent a lot of time on our screens ahead of the release of the 2019 Federal Budget, touting tax cuts and big plans for infrastructure. Last night, he finally unveiled the government’s monetary plan for the coming years, and there’s plenty to unpack.
As expected, tax cuts featured prominently on the agenda, with low and middle income earners slated to receive some pretty sizeable cash rebates in the next few months. Aussie infrastructure will also receive a shot in the arm, with a proposed $100 billion going towards roads, rails and general development over the next ten years.
But this isn't just a budget. It’s the beginning of the Morrison government’s attempt to woo Australians, who’ll be taking to the polls in mid-May. And while there are plenty of pre-election sweeteners on the table, whether or not they’ll boost the Coalition’s electoral chances remains to be seen. Whatever the case, here’s what the Federal Budget means for your taxes, mortgage and energy bills.
Leading up to the budget’s official release, there was plenty of talk about Liberal rolling out some substantial tax cuts, and they definitely delivered. The Coalition promised to double the current tax offsets for low and middle-income earners, putting it on par with Labour’s commitment of the past year.
That means middle-income earners will receive an extra $550 per year, bringing their total tax offsets to $1,080. A majority of Australians fall in this category, so that’s money that millions of people will be getting back in their pockets.
There are also future plans to cut taxes for middle and high income earners by flattening tax brackets by 2024. That means anyone earning between $45,000 and $200,000 will pay a marginal rate of 30%, instead of the previous 32.5%.
What he said: “The Government is more than doubling the low and middle income tax offset from 2018-19. Taxpayers earning up to $126,000 a year - including teachers, tradies and nurses - will receive a tax cut.”
“For a single income family, this means up to $1,080 in your pocket per year. And for families on a dual income, up to $2,160. This is money that could go towards your monthly mortgage payment, your quarterly power bill or your yearly car insurance.”
“More than 10 million taxpayers will benefit, with 4.5 million receiving the full amount.”
Another major talking point of the past week was the government’s Energy Assistance Payment. This one-off payment will go to 3.9 million Australians to ease the burden of rising electricity prices, and will be paid out to aged pensioners, single parents, veterans, carers, and anyone receiving the disability support pension.
What he said: “[W]e also recognise the pressure energy bills place on those who can least afford it. That’s why we are providing additional cost of living relief for pensioners through a one-off Energy Assistance Payment of $75 for singles and $125 for couples.”
“This payment will be paid this financial year and comes on top of other actions the Government has taken to reduce power bills.”
Small to medium businesses will receive a leg-up in the form of lower taxes. The current tax rate of 27.5% is set to drop to 26% in the next year, and then down to 25% in 2021.
The government has also announced plans to increase the instant asset write-off threshold from $20,000 to $25,000, meaning that assets which cost less than $25,000 can be written off in the year they were acquired. This will be available to businesses with a turnover of less than $50 million, up from the previous $10 million threshold.
What he said: “Small businesses are the engine-room of our economy. They are integral to every local community.”
“[The instant asset write-off] will be increased from $25,000 to $30,000, and it can be used every time an asset under that amount is purchased. Allowing a café to get a new fridge or grill, a plumber to buy new tools or a courier a new van.”
The 2019 budget comes on the heels of the Banking Royal Commission, which did a grade-A job of exposing the fault lines of the Australian financial sector. Since the report’s release back in February, there’s been mounting pressure for regulatory bodies to step up and start applying stricter oversight.
To that end, financial regulators will receive an additional $606.7 million in funding to make sure the Royal Commission’s findings don’t go unaddressed. $404.8 million will go to ASIC - with $146 million earmarked for funding an “accelerated enforcement approach” - while APRA will receive $152 million.
An extra $35 million will also go to the federal court in anticipation of increased litigation proceedings. This will fund the appointment of two judges, salaries for staff, along with new facilities. If your trust in banks has been dwindling as of late, this is reason to be optimistic.
What he said: “We also provide additional resources to our financial regulators following the Banking Royal Commission. This will strengthen the financial system and deliver better outcomes for all Australians.”
If all these announcements have you in the mood to tinker with your household budget, be sure to check out our handy budget calculator. Or if you need some more comprehensive guides on how to make the most of your finances, head over to our family finances page to get you started on the right track.