Stuart Chan
Partner - Specialist Medical Services, Cutcher & Neale

The Coalition are providing tax breaks for more than 10 million Australians by simplifying the current system and removing the 37% tax bracket entirely.

In the process, the Coalition are planning to increase the 19% tax rate to $45,000 (previously $37,000) and they have also proposed reducing the 32.5% to 30% resulting in a flat 30% for anyone earning between $45,000 and $200,000.

Those earning $200,000 a year will get a tax cut worth $11,640. See the below graph of what the proposed tax rates may look like.

Instant Asset Write-off

As part of the 2019 budget, businesses with a turnover of under $50 million but more than $10 million can write-off assets against their taxable income. Previously, businesses turning over more than $10 million were excluded from the scheme.

The Coalition also increased the threshold from $25,000 to $30,000, as of 2 April 2019. This is a significant increase in threshold from 2017, which gave a $20,000 instant write-off amount.

Medicare

The Coalition have promised to lift the Medicare rebate freeze. This means Medicare payments to medical practitioners will increase to reflect rising costs associated with public care.

The Federal Budget contained a $1 billion funding boost, including $448.5 million for GPs to better treat patients with chronic diseases, and investments in mental health. It will add 30 new Headspace Centres, build new residential eating disorder treatment facilities nationally, and take new measures to prevent Indigenous youth suicide.

First Home Buyers Scheme

The Coalition recently announced a First Home Buyers Scheme which allowed first home buyers to only supply a 5% deposit and the government would make up the remaining 15%.

This would result in first home buyers saving up to $10,000 by not having to pay lenders mortgage insurance. The scheme is limited to the first 10,000 homebuyers and for single people earning up to $125,000 or couples earning up to $200,000. This could offer an opportunity for the next generation of young Australians looking to purchase their first home. Keep in mind this does not limit itself to young Australians but anyone who has yet purchased their first home.

Key tax policies that are still intact

• You are still eligible to negatively gear
• Individuals and trusts will still benefit from the 50% CGT discount for assets held greater than 12 months
• Franking credits will still be refundable for individuals and super funds
• Tax deductions are still eligible to be claimed on managing your tax affairs
• The non-concessional contributions cap stays at $100,000 and will not be reduced to $75,000
• The threshold for imposing an additional 15% tax on concessional contributions of high-income earners will remain at $250,000 and will not be reduced to $200,000
• Catch up concessional contributions are still allowed for individuals with a total superannuation balance of less than $500,000
• Tax deductions are still allowed for your personal super contributions
• A SMSF can still utilise their fund to organise borrowing arrangement to acquire property
• There will not be a standard minimum tax rate of 30% imposed on family trust distributions

Should you have any questions or want further information, please do not hesitate to contact Cutcher & Neale on 1800 988 522 or medical@cutcher.com.au