2020 Federal Budget Review
About the author:
- Author name:
- By Terri Bradford
- Job title:
- Director, Wealth Management
- Date posted:
- 08 October 2020, 10:55 AM
The 2020 Federal Budget is touted as an 'Economic Recovery Plan for Australia'.
We summarise those measures that have been proposed in this year's Federal Budget from a wealth management/financial planning perspective.
Personal Income Tax Cuts
It had been anticipated the Government would bring forward the tax cuts originally planned for commencement in the 2022/23FY and this prediction proved correct.
- Low income tax offset will increase from $445 to $700
- The top threshold of the 19% tax bracket will increase from $37,000 to $45,000
- The top threshold of the 32.5% tax bracket will increase from $90,000 to $120,000
- One-off additional LMITO worth up to $1,080 for individuals, or $2,160 for dual income couples
Bringing forward 2022/23 Marginal Tax Rates to 2020/21 FY:
|Up to $18,200
|$18,201 - $45,000
||$0 + 19% over $18,200
|$45,001 - $120,000
|$5,092 + 32.5% over $45,000
|$120,001 - $180,000
||$29,467 + 37% over $120,000
||$51,667 + 45% over $180,000
The discussion on whether the Government would further freeze Super Guarantee rates did not come to fruition.
Instead the Government has introduced their “Your Future, Your Super” plan which introduces a "stapled" super fund for employees to take with them whenever they change jobs.
MySuper products will have to pass an annual performance test and if they fail the test over two consecutive years, no new members can be accepted.
There was no mention of the Retirement Income Review papers, which would be disappointing to many in the industry who were anticipating some type of announcement.
Additional payments are scheduled for pensioners and welfare recipients as part of an extension of the Coronavirus Supplement.
Welfare recipients will receive an extra $250 per fortnight up to 31 December 2020, and pensioners and other eligible recipients, including concession card holders, will receive two extra support payments worth $250 between December 2020 and early 2021.
Eligible veterans will also receive these additional support payments
Small Business / SMEs
Small business / SMEs focus significantly in this 2020 Budget with a number of initiatives proposed including expansion of tax concessions, tax relief, temporary insolvency measures and the introduction of a JobMaker Hiring Plan.
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