NEWS FROM THE BUDGET 2018
The Government is pitching a plan to deliver tax relief to lower and middle-income Australians, which it says will benefit more than 10 million people.
The most immediate measure will be changing the low-income tax offset (LITO) — essentially a lump sum on your tax return.
From next July, those who earn up to $37,000 will see their tax bill reduce by $200.
The offset increases incrementally for those earning between $37,000 and $48,000, before the maximum offset of $530 is applied to those earning between $48,000 and $90,000.
The benefit then gradually decreases to zero at a taxable income of about $125,000.
There will also be a measure to combat bracket creep, introduced in stages.
From July next year, people earning between $87,000 and $90,000 will move back into the lower tax bracket and pay 32.5 per cent instead of 37 per cent in tax on those earnings.
In 2022, the top threshold of the lower tax bracket will be increased from $37,000 to $41,000, meaning more earners will fall inside the 19 per cent tax rate bracket.
Treasurer Scott Morrison says the plan will mean 94 per cent of Australian taxpayers will pay no more than 32.5 cents in the dollar.
Pensioners will be able to earn more money without impacting their pension under the Pension Work Bonus scheme. The program will be expanded to include the self-employed.
Overall, the cost to the budget is $227 million.
The Pensions Loan Scheme will be boosted to enable everyone over pension age to effectively mortgage their home to the Government to access fortnightly payments.
These payments are now as much as one-and-a-half times the pension rate.
An additional 14,000 high-level home care support packages will also be introduced over the next four years.
Big changes in superannuation are designed to secure the retirement incomes of Australians.
A 3 per cent annual cap on fees for accounts with less than $6,000 will be applied.
Exit fees on all superannuation accounts will be banned.
In addition, all inactive super accounts with balances less than $6,000 will be transferred to the Australian Taxation Office, which will then “proactively” reunite these inactive accounts.
Small businesses now have longer to write off business purchases.
The Government extended the $20,000 instant asset write-off for another 12 months to June 30, 2019.
The initiative was initially introduced in the 2015-16 budget and has been kicked along at a cost of $350 million over the forward estimates.
People who own vacant blocks of land will no longer be able to claim tax deductions against them from July next year.
The restriction won’t apply to any expenses incurred after construction begins on the vacant block or any land being used by owners to carry out business, such as farmers’ crops.
The Government estimates this will save the budget $50 million over the forward estimates.