2020 Federal Budget Review

About the author:

Terri Bradford
Author name:
By Terri Bradford
Job title:
National Manager Wealth Management
Date posted:
08 October 2020, 10:55 AM

The 2020 Federal Budget is touted as an 'Economic Recovery Plan for Australia'. We summarise those measures that have been proposed in this year's Federal Budget from a wealth management/financial planning perspective.

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Personal Income Tax Cuts

It had been anticipated the Government would bring forward the tax cuts originally planned for commencement in the 2022/23FY and this prediction proved correct. 

  • Low income tax offset will increase from $445 to $700
  • The top threshold of the 19% tax bracket will increase from $37,000 to $45,000
  • The top threshold of the 32.5% tax bracket will increase from $90,000 to $120,000
  • One-off additional LMITO worth up to $1,080 for individuals, or $2,160 for dual income couples

Bringing forward 2022/23 Marginal Tax Rates to 2020/21 FY:

Income Range Tax Rates 
Up to $18,200 0% 
$18,201 - $45,000 $0 + 19% over $18,200
$45,001 - $120,000
$5,092 + 32.5% over $45,000
$120,001 - $180,000 $29,467 + 37% over $120,000
$180,001 $51,667 + 45% over $180,000

Superannuation

The discussion on whether the Government would further freeze Super Guarantee rates did not come to fruition.

Instead the Government has introduced their “Your Future, Your Super” plan which introduces a "stapled" super fund for employees to take with them whenever they change jobs.

MySuper products will have to pass an annual performance test and if they fail the test over two consecutive years, no new members can be accepted.

There was no mention of the Retirement Income Review papers, which would be disappointing to many in the industry who were anticipating some type of announcement.

Social Security

Additional payments are scheduled for pensioners and welfare recipients as part of an extension of the Coronavirus Supplement.

Welfare recipients will receive an extra $250 per fortnight up to 31 December 2020, and pensioners and other eligible recipients, including concession card holders, will receive two extra support payments worth $250 between December 2020 and early 2021.

Eligible veterans will also receive these additional support payments

Small Business / SMEs

Small business / SMEs focus significantly in this 2020 Budget with a number of initiatives proposed including expansion of tax concessions, tax relief, temporary insolvency measures and the introduction of a JobMaker Hiring Plan.

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Federal Budget 2020 insights

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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