What will the 2019 Federal Budget announcement mean for you?

What will the 2019
Federal Budget
mean for you?
Presented by
Keat Chew, Head of Technical Services
Nigel Smith, Technical Services Consultant
4 April 2019

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1 CPD point available
• Must attend for at least
30 minutes
• CPD details will be
included in the post-
webinar email
This webinar is being
recorded
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Housekeeping
2019 Federal Budget Review

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As a specialist platform provider, Netwealth provides
financial advisers with a wide range of financial
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investments and superannuation.
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2019 Federal Budget Review4

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Keat Chew
Head of Technical Services
Netwealth
Nigel Smith
Technical Services Consultant
Netwealth
Meet today’s speakers

| netwealth 2019 Federal Budget Review7
Disclaimer
This information has been prepared and issued by Netwealth Investments Limited (netwealth),ABN 85 090 569 109,AFSL 230975,
RSE L0000192). It contains factual information and general financial product advice only and has been prepared without taking into
account your individual objectives, financial situation or needs.The information provided is not intended to be a substitute for
professional financial product advice and you should determine its appropriateness having regard to your particular circumstances
and seek any independent financial or other professional advice you may require.The relevant disclosure document should be
obtained from netwealth and considered before deciding whether to acquire, dispose of, or to continue to hold, an investment in any
netwealth product.
While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), no person,
including Netwealth, or any other member of the netwealth group of companies, accepts responsibility for any loss suffered by any
person arising from reliance on this information.

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Session overview
1. Taxation
2. Superannuation
3. Social Security
4. Winners and losers
8 2019 Federal Budget Review

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Taxation

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How does it work?
• L&M income tax offset (non refundable) of up to
$1,080 (ex $530) from 2018/19 to 2021/22
– Relief of $255 (ex $200) for income < $37,000
– Between $37,000 and $48,000, increase 7.5c
(ex 3.0c) per $ over $37k to max of $1,080
(ex $530)
– Between $48,000 and $90,000, full benefit of
$1,080 (ex $530)
– From $90,001 to $126,000, offset phase out
at 3.0c (ex 1.5c) per $
• Immediate tax benefit maximum of $1,080 from
LMITO for those in $48k to $90k bracket
Step 1: Low and Middle income tax relief
Three steps tax reduction plan
Rate (%)
Current tax thresholds
From 1 July 2018 Income range ($)
Tax free 0 - $18,200
19 $18,201 – $37,000
32.5 $37,001 – $90,000
37 $90,001 – $180,000
45 >$180,000
Low & middle income tax
offset
Up to $1,080 (ex $530)
LITO Up to $445

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How does it work?
• From 1 July 2022, increase LITO from $445 to
$700 (ex $645)
– Increased LITO reduced at 5.0c (ex 6.5c)
per $ between $37,500 and $45,000, and
1.5c per $ between $45,000 and $66,667
• From 1 July 2022, increase 19% threshold
from $37,000 to $45,000 (locking in Step 1
benefit)
• From 1 July 2022, increase 32.5% threshold
from $90,000 to $120,000
• In summary, from 1 July 2022, maximum tax
benefit of $2,430 for those earning $120k
Step 2: Middle income bracket creep protection
Rate (%)
Current tax
thresholds
From 1 July 2018
Income range ($)
New tax thresholds
From 1 July 2022
Income range ($)
Tax free 0 - $18,200 0 - $18,200
19 $18,201 – $37,000 $18,201 – $45,000
32.5 $37,001 – $90,000 $45,001 – $120,000
37 $90,001 – $180,000 $120,001 –
$180,000
45 >$180,000 >$180,000
Low & middle
income tax offset
Up to $1,080 (ex
$530)
-
LITO Up to $445 Up to $700 (ex
$645)

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How does it work?
• From 1 July 2024, increase 30.0% (ex
32.5%) threshold from $120,000 to
$200,000, top tax rate > $200,000
• In summary, largest tax benefit of $7,475
for someone on $200k from 1 Jul 2024
Strategic considerations and impacts
• Non refundable tax offset, not available to
non tax residents, and cannot be used to
offset Medicare levy
• Divert income to lower earning spouse
• Plan to reinvest tax savings
• Does allow more planning for assets to be
outside super
– No more than 30% tax rate up to $200k
Step 3: Simplify the tax system – and further tax benefit
Rate (%)
Current tax
thresholds
From 1 July 2018
Income range ($)
New tax thresholds
From 1 July 2022
Income range ($)
New tax
thresholds
From 1 July 2024
Income range ($)
Tax free 0 - $18,200 0 - $18,200 0 - $18,200
19 $18,201 – $37,000 $18,201 – $45,000 $18,201 – $45,000
32.5/30.0* $37,001 – $90,000 $45,001 –
$120,000
*$45,001 -
$200,000
37 $90,001 –
$180,000
$120,001 –
$180,000
-
45 >$180,000 >$180,000 >$200,000
Low & middle
income tax offset
Up to $1,080
(ex $530)
- -
LITO Up to $445 Up to $700
(ex $645)
Up to $700
(ex $645)

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Immediate depreciation of assets costing less than
$30,000
• Applies on a per asset basis, can write off multiple assets
• Applies to small (with aggregated T/O < $10m) and
medium sized businesses (between $10m to $50m T/O)
• Assets acquired and installed ready for use from Budget
night 7.30pm 2 Apr 19 to 30 June 2020
– Prior changes have already allowed write offs of
$20,000 and $25,000 (announced 29 Jan 19)
• For small businesses, assets more than $30,000 can
continue to be put in the simplified depreciation pool,
depreciated at 15% in first year and 30% thereafter
– Pool balance can also be immediately written off if
less than $30,000
• Medium businesses do not have small business pooling
rules so will depreciate as normal
Instant asset write off – further extension

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Strategic considerations and impacts
• Great incentive - advance depreciation provides
additional cashflow (upfront) for the business
(company or sole trader)
– Additional cash could be reinvested into business
or fund additional employer or personal
superannuation contribution
• Any major asset purchase should be purchased in
this period to maximise claim in shortest time period
(by 30 June)
Instant asset write off – further extension
Asset first used or
installed ready for
use between
Small business
(turnover less than
$10m)
Medium-sized
business
(turnover more
than $10m but less
than $50m)
1 July 2018 to 28
January 2018
< $20,000 n/a
29 January 2019 to
2 April 2019
< $25,000 n/a
2 April 2019* to 30
June 2020 (* after
7.30pm)
< $30,000 < $30,000

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Increased thresholds from 1 July 2018
• $22,398 (ex $21,980) for individuals and $37,794 (ex
$37,089) for families
• Additional amount for each dependant child/student of
$3,471 (ex $3,406)
• Single pensioner below Age Pension age to $35,418 (ex
$34,758)
Strategic consideration and impact
• Where possible reduce income below the threshold
where no Medicare levy applies
– Together with various tax offsets, if planned properly
an individual earning less than $30k income may pay
little or no tax (including Medicare levy) at all
• Any deductible expenses will reduce assessable income
for Medicare levy purposes
– Main one being personal deductible contributions to
super (no more 10% rule makes it simpler to achieve)
Medicare levy changes

Superannuation

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From 1 July 2020, no work test required for
• Individuals aged 65 and 66
– Will allow voluntary contributions - both concessional
and non concessional contributions
Extend access for age 65/66 to make 3 yrs worth of
NCC
– Does it mean trigger possible at 66 or mere allowing
completion of the 3yr period triggered earlier?
Improved condition for spouse contribution
• Spouse contribution will be allowed for those up to age
74 (previously up to age 69)
– Work test not required (as above) up till age 66
– Normal rules for spouse contributions still apply,
including TSB of $1.6m
Improved work test exemption and spouse contribution

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• Provides flexibility (additional timeframe) with tax
deduction and contributions
– Personal deductible concessional contributions useful
to reduce income
– Don’t forget the 5 year unused CC cap carried forward
• 3 year brought forward rule can possibly be used to
trigger in the year turn 66
– Need legislation to confirm
• Consider interaction with downsizing contributions which
don’t require work test
• Similarly, consider interaction (from 1 July 19) with 12
month extension of work test exemption rule
– For those with TSB < $300,000 aged 65 to 74
– Met the work test in the previous financial year
• Should always consider doing spouse contribution even
in retirement(as part of recontribution strategy), subject
to work test and meeting conditions
– Guaranteed 18% return on contribution
– Now that it is extended by 5 years
• Together with tax cuts (as discussed), now have great
flexibility to optimise retirement planning approaching
Age 65/66
– Important though to plan ahead
Improved work test exemption and spouse contribution

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From 1 July 2020
• Superannuation fund trustees will be allowed to choose
preferred method to calculate ECPI
– Segregated method
– Proportionate method
• An actuarial certificate no longer required for funds solely
with retirement phase pension accounts
• Seems to be a reversal for SMSFs with a member with
TSB of $1.6m and has a pension in retirement phase
– Under current rules, such funds cannot segregate
• Need to reconsider if segregation again will benefit fund
members (fund by fund)
– Impact of decisions made based on 1 July 17
changes, i.e. resetting of cost base
– If deemed disposal at 30/6/17, deferred gain will
crystallise on subsequent disposal, only gain accruing
since 1/7/17 should benefit from this segregation
change
– Those that maintain original cost base (no deemed
disposal) possibly benefit most from choice to
segregate again
– Remember still have the limitation of $1.6m of pension
in retirement phase (for purpose of segregation)
Exempt current pension income (ECPI) method

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Social
Security

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A one off payment on 2 Apr 2019 for those eligible for
qualifying payments
• $75 for singles
• $62.50 for each member of a couple
• Claimant must be resident in Australia
Qualifying payments
• Age pension
• Carer payment
• Disability support pension
• Parenting payment single
• Veterans Service pension and income support
supplement
• War widow(er) pension
• Various permanent impairment payments under Military
Rehab and Compensation Act
• Newstart Allowance (included last night)
Energy assistance payment

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Winners
& Losers

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Winners
• Low and middle income earners and families
• Older Australians
• Small and medium businesses
• SMSFs
Losers
• None really, unless proposals don’t get through
Who are the winners and losers?

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1 CPD point available
• Must have attended for >30 mins
• CPD details will be included in the
webinar resources email
Webinar recording and slides
• These will be included in the
webinar resources email
Thank you

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Federal budget summary
• Adviser focused
Investing in today’s low interest rate climate
• CPD Portfolio Construction webinar
26
Links will be in the follow-up email
You may be interested in

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Innovation Toolkit
• Workshops and resources to help your team innovate
• Download from our website
Banqer
• Supporting financial literacy in schools
• Refer a teacher today
27
Links will be in the follow-up email
You may be interested in

Contact
Thank you
Keat Chew
Head of Technical Services
1800 555 223
keat@netwealth.com.au
Nigel Smith
Technical Services Consultant
1800 555 223
nigel@netwealth.com.au

Disclaimer
This information has been prepared and issued by Netwealth Investments Limited (netwealth),ABN 85 090 569 109,AFSL 230975,
RSE L0000192). It contains factual information and general financial product advice only and has been prepared without taking into
account your individual objectives, financial situation or needs.The information provided is not intended to be a substitute for
professional financial product advice and you should determine its appropriateness having regard to your particular circumstances
and seek any independent financial or other professional advice you may require.The relevant disclosure document should be
obtained from netwealth and considered before deciding whether to acquire, dispose of, or to continue to hold, an investment in any
netwealth product.
While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), no person,
including Netwealth, or any other member of the netwealth group of companies, accepts responsibility for any loss suffered by any
person arising from reliance on this information.

What will the 2019 Federal Budget announcement mean for you?

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What will the 2019 Federal Budget announcement mean for you?