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2018/19 Federal Budget Key Points

Last month the Federal Government handed down its 2018/19 budget on Tuesday 8th May. Following are some of the key Budget announcements affecting individual taxpayers, businesses, investors and retirees.


  • The introduction of the 'Low and Middle Income Tax Offset', a temporary non-refundable tax offset of up to $530 p.a. to Australian resident low and middle income taxpayers for the 2019 to 2022 income years. This offset will apply in addition to the Low Income Tax Offset.

  • Providing tax relief for individual taxpayers by progressively increasing some of the tax brackets (including an increase in the upper threshold of the 32.5% personal income tax bracket from $87,000 to $90,000 from 1 July 2018), and eventually removing the 37% tax bracket entirely.

  • Increase in the Medicare levy low-income thresholds for singles, families, and seniors and pensioners for the 2018 income year.


  • The $20,000 immediate write-off for small business will be extended by a further 12 months to 30 June 2019 (i.e., for businesses with aggregated annual turnover less than $10 million).

  • Remove tax deductibility of payments where PAYG withholding is disregarded.

  • Introduction of an economy-wide cash payment limit. From 1 July 2019, the Government will introduce a limit of $10,000 for cash payments made to businesses for goods and services.

  • Partners that alienate their income by creating, assigning or otherwise dealing in rights to the future income of a partnership (i.e., 'Everett assignments' will no longer be able to access the small business CGT concessions from 8 May 2018.

  • Expanding the contractor payment reporting system to: security providers and investigation services, road freight transport and computer system design and related services.

  • Under the contractor payment reporting system, businesses are required to report payments to contractors to the ATO. The Government has announced it will further expand the contractor payment reporting system.


  • Increasing the maximum number of allowable members in an SMSF (or small APRA fund) from four to six members from 1 July 2019 (along with various other superannuation-related proposals).

  • Introduction of an exemption from the work test for voluntary contributions to superannuation, for people aged 65-74 with superannuation balances below $300,000, in the first year that they do not meet the work test requirements.

  • From 1 July 2019, the Government will change the annual audit requirement to a three-yearly requirement for SMSFs with a history of good record-keeping and compliance.

  • The Government intends to improve the integrity of the ‘notice of intent’ (‘NOI’) processes for claiming personal superannuation contribution tax deductions.


  • Denying deductions for expenses associated with holding vacant residential or commercial land from 1 July 2019.

  • Ensuring that unpaid present entitlements (‘UPEs’) come within the scope of Div.7A from 1 July 2019.

  • Reforms to combat illegal phoenixing including the extension of the Director Penalty Regime to GST, luxury car tax and wine equalisation tax, making directors personally liable for the company’s debts.

  • Improving the taxation of testamentary trusts and extending anti-avoidance rules for circular trust distributions.

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