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Federal Budget 2018: Details you need to know

Federal Budget 2018: Details you need to know

The Australian Treasurer Scott Morrison delivered his third Federal Budget on 8 May 2018.

The Treasurer said spending had been brought under control leading to a stronger economy and more jobs.

The proposed Budget measures focussed on changes to taxation, spending on infrastructure and increases aiming to boost education and aged care.

Changes to taxation

  • Those earning up to $37,000 and paying 19 cents in the dollar would have their tax reduced by up to $200 per year
  • Those earning more than $37,000 and paying 32.5 cents in the dollar would have their tax reduced by up to $530 per year
  • Tax relief would reduce to zero at just over $125,000
  • In the 2016-17 Budget the threshold for the 32.5% tax bracket increased from $80,000 to $87,000. This threshold would be set at $90,000 from 1 July 2018
  • Australians earning more than $41,000 would only pay 32.5 cents in the dollar all the way up to the top marginal tax rate threshold which will be adjusted to $200,001
  • The $37,000 threshold would be lifted to $41,000 and the $90,000 threshold would be raised again to $120,000, preventing 1.8 million Australians paying 37 cents in the dollar
  • 37% tax bracket to be abolished in 2024-25

Superannuation

  • Australian Taxation Office (ATO) to proactively find lost super and have it sent to your active superannuation account
  • Ban on account exit fees when changing superannuation funds
  • Insurance within super to be opt-in rather than default for members under 25, members with balances of less than $6,000 and members whose accounts have not received a contribution in 13 months and are inactive 
  • The Pension Loans Scheme would be opened to all older Australians to include full rate pensioners and self-funded retirees, to boost retirement income by up to $17,800 for a couple, without impacting their eligibility for the pension or other benefits
  • Pension Work Bonus to allow pensioners to earn an extra $1,300 a year without reducing their pension payments and extended to self-employed individuals who would be able to earn up to $7,800 per year
  • No change for franked dividends tax refunds for investors in Australian companies

Families

The Parental Income Test for access to Youth Allowance for independent students from 1 January 2019 to be relaxed by an additional $10,000 per annum and an additional $10,000 for each additional child.

Small business

  • Extension of instant asset write off for businesses with a turnover up to $10m on purchases of up to $20,000
  • Additional $250m for the Skilling Australians Fund to develop the people and skills needed to grow businesses

Rural and agribusiness

  • Additional funding to protect against pests, disease and weeds
  • Funding for new technology to better detect biosecurity risks

Infrastructure

$75bn, 10-year rolling infrastructure plan to continue including:

  • $3.5bn to establish the Roads of Strategic Importance initiative to upgrade key freight routes to improve road safety and better connect sectors such as agriculture and mining to export markets - including $400m for roads in Tasmania, $100m for the Barton Highway in NSW and the ACT and $1.5bn for roads in the Northern Territory
  • $1bn to establish an Urban Congestion Fund
  • $250m to establish the Major Protect Business Case Fund for development and planning of national projects
  • $160m to upgrade sections of the Outback Way

Aged care

  • Government to increase the number of home care places by 14,000 over four years at a cost of $1.6bn
  • Over 74,000 high level home care places to be available by 2021-2022, an increase of 86% on 2017-18
  • $146m to improve access to aged care services in rural, regional and remote Australia
  • $83m for increased support for mental health services in residential aged care facilities, especially to combat depression and loneliness
  • Wage subsidies of up to $10,000 for employers who take on older Australians who choose to stay in work

Schools, students and education

  • Schools to receive a record $18.7bn, with a legislated rise to around $30bn in 2027
  • Extension of the National Schools Chaplaincy program on a permanent basis, with an anti-bullying focus
  • Extension of the National Partnership Agreement on universal access to early childhood education for a further year at a cost of $440 million
  • On July 2, the Turnbull Government's new child care package will come into effect

Healthcare

  • An extra $1.4bn for listings on the Pharmaceutical Benefits Scheme (PBS), including medicines to treat spinal muscular atrophy, breast cancer, refractory multiple myeloma, and relapsing-remitting multiple sclerosis, as well as a new medicine to prevent HIV
  • Lifeline Australia to receive additional support, as will funding for Mental Health Research with $125m over 10 years from the Medical Research Future Fund
  • $20.9m to support parents and infants by funding tests for new conditions and to ensure that debilitating conditions are picked up at the earliest opportunity
  • $154m to promote active and healthy living, including $83m to improve existing community sport facilities, and to expand support for the Sporting Schools and Local Sporting Champions programs
  • In rural and regional areas, funding for a plan to get more doctors to where they are needed through a new workforce incentive program, including five regional medical schools within the broader Murray Darling region
  • Increased financial support for the Royal Flying Doctor Service to guarantee rural and remote access to dental, mental health and emergency medical services 
  • $550m commitment to address remote housing needs in the Northern Territory for Indigenous Australians, as well as $1.7bn through primary health care model
  • $112m for veteran centric reform package, as well as support for ongoing veterans' mental health and employment initiatives

Protecting Australia

  • $294m to harden up security at airports
  • $50m to upgrade security infrastructure at 64 regional airports
  • $122m to enhance screening capability for inbound air cargo and international mail
  • $122m to increase police and border force presence and capability at nine major domestic and international airports
  • Additional investment to improve scrutiny of visa processing and passenger screening, and clearance of visitors and goods at our borders
  • $160m to help police, criminal intelligence and domestic security agencies fight crime and prevent terrorism, including $68.6m to disrupt, prevent and investigate child exploitation and abuse

Keep in mind 

Any changes outlined in the Federal Budget must be passed by both the House of Representatives, which is controlled by the government, and the Senate, where proposed expenditures are subject to examination within Senate estimates hearings. This means any proposed cuts or changes outlined above may not necessarily become law.

Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.