Budget 2019: How it will affect you

 

From ScoMo to ScoMore, if they can pay for it.

The Morrison government is offering more tax relief more quickly in the hope of giving itself more of a chance at next month's poll.

The biggest winners under Josh Frydenberg's new blueprint are workers on between $48,000 and $90,000 a year.

The tax offset they were already due to get in their next tax return would more than double to $1000-plus.

So for a household where two people are working and earning in that range, there's a $2000 windfall available in just a few months.

That will repeat each year until 2022.

The Morrison government is offering more tax relief more quickly in the hope of giving itself more of a chance at next month’s polls. Picture: Gary Ramage
The Morrison government is offering more tax relief more quickly in the hope of giving itself more of a chance at next month’s polls. Picture: Gary Ramage

Mr Frydenberg said the aim was to support the economy by putting more money in people's pockets.

It's sorely needed, given it's been so hard to get a pay increase.

"This is money that could go towards your monthly mortgage payment, your quarterly power bill or your yearly car insurance," the Treasurer said in his Budget speech.

"This tax relief will life household incomes, ease cost of living pressures and boost spending at local businesses."

No one would lose significantly. The Coalition has more money to play with than it expected 12 months ago (in that time, Labor's price to win the election has shortened to $1.18).

So this plan has to muster as many votes as it can.

The doubling of the tax offsets more than matches Bill Shorten's promise in his Budget reply speech last year.

For sole parents earning $48,000 to $90,000, an already legislated tax offset of $530 jumps by $550. Picture: iStock
For sole parents earning $48,000 to $90,000, an already legislated tax offset of $530 jumps by $550. Picture: iStock

Workers on more than $126,000 don't get these refunds. However, Mr Frydenberg's new blueprint holds out the prospect of enlarged tax cuts from 2022.

There was speculation early yesterday that the Government would attempt to get its super-sized tax relief through both houses of parliament today.

But in the lock up last night a source from the PM's office said it was more than happy to fight the election on tax - in particular, its new plan to lower the 32.5 per cent tax rate to 30 per cent.

To determine what the Budget means for you, first pick the household type closest to yours then find the nearest total income level.

The figures are annual comparisons between what you are paying in tax now and the way the world would look from July 1 - assuming the new plans pass into law.

PwC partner and former Treasury economist Jeremy Thorpe said it was a classic pre-election Budget. Picture: Supplied
PwC partner and former Treasury economist Jeremy Thorpe said it was a classic pre-election Budget. Picture: Supplied

These exclusive numbers have been prepared independently by PwC partner Jeremy Thorpe, a former Treasury economist.

"No one is a loser; It is a classic pre-election Budget," Mr Thorpe said. "It continues trend of targeting relief at lower- and middle-income earners."

Mr Shorten is likely to trump the Government in his Budget reply speech on Thursday.

He can do so because Labor is planning is to squirrel away $200 billion over a decade by keeping franking credit refunds, halving the capital gains tax discount and axing negative gearing on all but new properties.

Here's what the budget means for you:

SINGLES

* For those on $48,000 to $90,000, an already legislated tax "offset" of $530 jumps by $550, payable in this year's returns

* A worker on $30,000 was due a $200 offset. The Treasurer proposes a $55 lift

* If you're on $100,000 you'd receive $780 instead of $380. The refunds repeat until 2022

* After that, low income earners would get a further $55 increase in their offset

* The offset for middle and higher earners goes but would be replaced by larger tax cuts worth $540

* That would comes on top of tax cuts already baked into the system, which grow in 2024

DINKS (50/50 INCOME)

* If you're both earning between $48,000 and $90,000 your combined saving would double to $2160

* There would also be increased savings just below and above that up to $126,000, but not as big

* The relief comes as an "offset" (refund) starting with this year's tax returns and recur until 2022

* From 2022-23 tax cuts would replace the low to middle income offset, while very low earners get a slight offset increase

* Above $126,000 there is no offset in the early years, but they receive the largest cuts down the track

 

SOLE PARENT (FIGURES BASED ON HAVING ONE CHILD, AGE NINE)

* If you're earning $48,000 to $90,000, an already legislated tax offset of $530 jumps by $550

* On less? There's a smaller increase. More? You'll get a slightly larger "offset" as well, up to $126,000

* The offset comes in your next tax return and repeat until 2022 when low income earners get a further $55

* The offset for middle and higher earners goes then but would be replaced by tax cuts worth an extra $540

* In 2024, the plan is to expand the tax cuts that were already on the cards

* Not factored into these number is a one-off Energy Assistance payment of $75 from this year

 

Singles on $100,000 will receive and $780 tax offset instead of $380. Picture: iStock.
Singles on $100,000 will receive and $780 tax offset instead of $380. Picture: iStock.

 

DOUBLE-INCOME COUPLE (50/50) WITH YOUNG KIDS (AGED ONE AND THREE)

* If each workers' earnings are in the $48,000 to $90,000 range your joint saving would double to $2160

* Just beneath and above that range there would also be extra relief, just not as much

* The savings are delivered as an "offset" in your 2018 tax returns, repeating until 2022

* From then tax cuts would replace the low to middle income offset, while very low earners get a slight offset increase

* If your individual incomes are $126,000 there is no offset in the early years, but there are large cuts in 2022 and 2024

 

DOUBLE-INCOME COUPLE (67/33) WITH YOUNG KIDS (AGED ONE AND THREE)

* If you're a household with a $100,000 earner and $50,000 earner, the new plan is for you to get a $1860 "offset"

* That's about a doubling compared to savings legislated last year; it will come in this year's tax returns and repeat until 2022

* At slightly lower incomes of $80,000 and $40,000 there is also a near-doubling in your saving to about $1600

* If your household brings in a combined $200,000, the lower-income earner's offset would be twice the size to $1080

* If it's $100,000, there would be an offset jump of about $600 to more than $1300

* From 2022, very low income earners get an increased offset while for others, already legislated tax cuts would increase

 

DOUBLE-INCOME COUPLE (50/50) WITH TEENS (AGED 13 AND 15)

* If you both earn between $48,000 to $90,000 it's proposed to double your joint saving to $2160

* A little below and beyond that band there would also be extra help, but it's not as much

* The savings come as an "offset" in your next tax return and repeat until 2022

* After that tax cuts replace the low to middle income offset, while very low earners get a slight refund increase

* Each over $126,000? There is no offset in the early years, but there would be enlarged cuts in 2022 and 2024

 

A dual-income couple earning between $48,000 to $90,000, with teenagers, could enjoy a tax saving of $2160. Picture: iStock
A dual-income couple earning between $48,000 to $90,000, with teenagers, could enjoy a tax saving of $2160. Picture: iStock

 

SINGLE-INCOME COUPLE WITH YOUNG KIDS (AGED ONE AND THREE)

* For those bringing in $48,000 to $90,000, the planned tax "offset" of $530 would jump by $550

* A worker on $30,000 was set to get a $200 offset. This proposes a $55 lift

* If you're on $100,000 you'd receive $780 instead of $380. The refunds come in tax returns and repeat until 2022

* After that, low income earners would get a further $55 increase in their offset

* The refund for middle and higher earners goes but would be replaced by enlarged tax cuts worth $540

* That would be on top of cuts already scheduled into the system, which deepen 2024

 

SINGLE-INCOME COUPLE WITH TEENS (AGED 13 AND 15)

* The biggest benefit goes to those earning between $48,000 and $90,000, with a tax refund windfall doubling to more than $1000

* If you're on a bit less or a bit more than that, you also get a larger "offset" although it's not going up quite so much

* The expanded savings will come in your returns, starting with this year's and repeating until 2022

* From then, tax cuts replace the low to middle income offset, while very low earners get a slight refund increase

* If your individual incomes are $126,000 there is no offset, but tax cuts slated for 2022 and 2024 get bigger

 

Age pensioners and veterans will get a one-off Energy Assistance payment of $75 before July. Picture: Supplied
Age pensioners and veterans will get a one-off Energy Assistance payment of $75 before July. Picture: Supplied

 

DOUBLE-INCOME COUPLE (67/33) WITH TEENS (AGED 13 AND 15)

* For a household of this type with a combined income of $150,000, you get a bigger $1860 tax "offset" from July

* That's about a doubling compared to what Parliament passed last year; the money comes in your 2018 returns

* If you're working with $120,000 between you there would also be an extra saving - about $1600 as now planned

* If you're on a combined $200,000, the lower-income earner's offset would doubles to more than $1000

* If the pooled amount is $100,000, the higher-income earner's refund doubles to more than $1300

* These offset recur until 2022 when tax cuts kick in; the proposal is to enlarge them

 

SINGLE RETIREE

* There isn't a lot here for self-funded retirees

* That may be because Labor has already told them to vote ScoMo if they oppose its franking credits crackdown

* Age pensioners and veterans will get a one-off Energy Assistance payment of $75 before July

* People aged 65 and 66 will get more flexibility to pump money into their superannuation from July next year

* Aged care funding gets a $725 million injection and 10,000 extra home care packages.

* Millions of dollars will be spent on several new aged care compliance initiatives to better protect seniors

 

* Jeremy Thorpe is a PwC partner and former Treasury economist



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