In a highly anticipated Budget, Federal Treasurer, Josh Frydenberg outlined an economic recovery plan to create jobs, rebuild our economy and secure Australia’s future.
Here are some of the relevant proposals intended to get money into the hands of those who need it most and stimulate growth.
Important: these Budget announcements are proposals only and shouldn’t be considered final until they are passed by the Senate. We’ll keep you informed as these developments occur. |
The Government has announced that it will spend $159.6 million over the next four years to implement a number of reforms to the superannuation system that it claims will collectively save fund members $18 billion in fees and other costs between now and 2030. The Government’s super reforms, broadly labelled as the Your Future, Your Super package, have four key elements:
The Government, for now at least, has not announced any change to the already legislated SG increases, which are due to see the SG rate increase from the current 9.5% to 10% from 1 July 2021, with further gradual increases to 12% by 2025.
It is broadly speculated that the Government may make an announcement in relation to these SG rate increases with its response to the recent Retirement Income Review, in the near future.
The Government restated in the Budget the previously announced extension of the COVID-19 early release of superannuation scheme to 31 December 2020, with no reference to a further extension of the scheme beyond that date.
The Government intends to bring forward Stage Two of its already legislated personal income tax cuts which will now commence from 1 July 2020 instead of the original start date of 1 July 2022. As a result, the higher income level to which the 19% tax bracket applies will be increased from $37,000 to $45,000 from 1 July 2020.
The proposed changes will also mean that from 1 July 2020 more individual taxpayers will be subject to a marginal tax rate of no more than 32.5%. The largest benefits of this round of tax cuts will flow to middle income earners, particularly those earning more than $120,000.
While the Low- and Middle-Income Tax Offset (LMITO) was due to be removed with commencement of Stage Two of the Personal Income Tax Plan from 1 July 2022, it will continue as a one-off additional benefit during the 2020-21 tax year.
The government announced the lowering of personal income taxes consistent with their 2018-19 plan. The table below provides a summary of the income tax rates.
|
Current threshold from 1 July 2018 |
Proposed thresholds from 1 July 2020 (previously from 1 July 2022) |
Thresholds from 1 July 2024 (unchanged) |
---|---|---|---|
Tax rate |
Income range ($) |
Income range ($) |
Income range ($) |
Tax free |
$0 - $18,200 |
$0 - $18,200 |
$0 - $18,200 |
19% |
$18,201 - $37,000 |
$18,201 - $45,000 |
$18,201 - $45,000 |
30% |
N/A |
N/A |
$45,001 - $200,000 |
32.5% |
$37,001 - $90,000 |
$45,001 - $120,000 |
N/A |
37 % |
$90,001 - $180,000 |
$120,001 - $180,000 |
N/A |
45% |
>$180,000 |
>$180,000 |
>$200,000 |
It’s important to note that with the back-dating of the tax cuts to 1 July 2020, this means that most individuals will only receive the full benefit of the reduced income tax on your earnings once you lodge your 2021 income tax returns after June next year.
For more on this year’s budget and how it may impact you, keep an eye out for updates on our website, or check out the official Budget website .
You may also want to consider seeking professional advice to understand these specific impacts. To make an initial no obligation appointment with a licensed financial planner, call us on 1300 348 546 8am–8pm, Monday to Friday or go to hostplus.com.au/advice
This information is general advice only and does not take into account your personal objectives, financial situation or needs. You should consider if this information is appropriate for you in light of your circumstances before acting on it. Please read the relevant Hostplus Product Disclosure Statement (PDS), available at hostplus.com.au before making a decision about Hostplus.