Summary of key announcements --Morgan Stanley Wealth Management
Personal taxation
· An increase to the low and middle income tax offset to $1,080 (currently $530), effective immediately.
· Increase in the 19% tax bracket to $45,000 from 1 July 2022 (currently $37,000).
· Increase to the low income tax offset to $700 (currently $445) from 1 July 2022.
· Reduction in the 32.5% tax bracket to 30% from 1 July 2024.
· Continuing plans to abolish the 37% tax bracket from 1 July 2024.
Superannuation
· Work test abolished for individuals under age 67 from 1 July 2020.
· Extension of the eligibility to receive spouse contributions to age 74.
Retirees / Older Australians
· Energy Assistance Scheme – $75 per single or $125 per couple for those receiving qualifying payments.
· $282 million for care at home packages.
· An additional 13,500 aged care places.
Small business
· Instant asset write off increased from $25,000 to $30,000 immediately.
· Turnover test for instant asset write off increased from $10 million to $50 million.
· Tax rate for companies with turnover under $50 million will reduce from 27.5 per cent to 26 per cent next year and 25 per cent by 2021-22.
What could happen under a change of Government?
· Capital gains tax discount – reduced from 50 per cent to 25 per cent for individuals.
· Top marginal tax rate – increasing from 45 per cent to 47 per cent.
· Negative gearing – restricted to new housing only, grandfathering applied. Losses related to investments limited to offsetting income from investments.
· Franking credits – no longer refundable after 30 June 2019.
· Trust distributions – minimum tax rate of 30 per cent applies to trust distributions.
· After tax super contributions – reduced to $75,000 pa (currently $100,000 pa)
· Catch up concessional contributions – abolished.
· Limited recourse borrowing arrangements – prohibited.
