How does the 2018 Budget affect you?

Mr Scott Morrison, the Federal Treasurer, handed down his third Budget on 8 May 2018. Being an election budget there were a number of sweeteners below that may be of interest to you.

Individuals

The Government has indicated there will be temporary tax concessions to low and middle income tax payers . This will apply over a seven year period from 1 July 2019 and will be achieved through changes to tax brackets and tax offsets. The Government's proposal to increase the Medicare Levy rate to 2.5% from 1 July 2019 has now been reversed and the Medicare Levy rate will remain at 2%. From 1 July 2024 the top marginal rate will be extended to taxable income exceeding $200,000 with the plan to abolish the 37% bracket altogether.

Business Owners

The $20,000 instant asset write-off will be extended for small businesses with turnover under $10million by another year to 30 June 2019. The Government has stood firm on delivering reductions in company tax rates ( note only to benefit those trading under the company structure). Tax deductions will no longer be available for payments to employees where no PAYG has been withheld despite PAYG withholding requirements applying.

Superannuation

The maximum number of allowable members in Self Managed Super Funds will be increased to six from 1 July 2019. From 1 July 2019, members aged between 65 and 74 who have super balances below $300,000 will be able to make voluntary contributions in the first year that they do not meet the work test requirements. Insurance arrangements for certain superannuation members will be changed from being a default framework to being offered on an opt-in basis. A 3% annual cap will be introduced on passive fees charged by superannuation funds on accounts with balances below $6,000 and exit fees on all superannuation accounts will be banned.

Youth Allowance

The parental income test threshold under the regional workforce independence criterion will increase by $10,000 to $160,000 with a further $10,000 increase to the threshold for each additional child.