Wednesday 01 May 2019

Recent developments

Welcome to the April technical roundup. This month's edition is a summary of technical news that occurred throughout March and April 2019.

The Government handed down its 2019 Federal Budget at 7:30pm on Tuesday 2 April 2019 and we have seen some legislative developments since. As there are no further sitting days in Parliament until after the election, all current bills will lapse.

Another item of note is the superannuation and social security rates and threshold changes were also announced by the relevant Government regulators.

Legislative developments

Acts

Medicare levy thresholds increased

  • Treasury Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Act 2019 makes the below amendments to the Medicare Levy Act 1986.
    • Increase the Medicare Levy phase-in thresholds for the 2018/19 year:
      • from $21,980 to $22,398 for individuals;
      • from $37,089 to $37,794 for couples;
      • from $34,758 to $35,418 for individuals eligible for the seniors and pensioners tax offset (SAPTO);
      • from $48,385 to $49,304 for families eligible to receive SAPTO.
    • An additional $3,471 from $3,406 to the phase-in thresholds for each additional dependent child or student for families.

First Home Super Saver Scheme amendments

  • Treasury Laws Amendment (2019 Measures No. 1) Act 2019 makes the below amendments to the Income Tax Assessment Act 1997.
    • Allowing individuals to satisfy the First Home Super Saver Scheme requirements earlier if they have:
      • applied for and received a First Home Super Saver determination;
      • applied for a request for release under that determination; and
      • enter into a contract to purchase or construct a home up to 14 days prior to the request for release being made.

Extension of the instant asset write-off rules

  • Treasury Laws Amendment (Increasing and Extending the Instant Asset Write-Off) Act 2019 makes the below amendments to the Income Tax Assessment Act 1997.
    • Extending the period where small business entities can access the instant asset write-off rules (expanded accelerated depreciation) to 30 June 2020.
    • Increasing the threshold for the cost of assets under these rules that can be immediately deducted from $20,000 to $25,000 for the period of 29 January 2019 to 30 June 2020 and to $30,000 for the period of 2 April 2019 to 30 June 2020.
    • Medium sized businesses (up to an aggregated turnover of $50 million) will also have access to these instant asset write-off rules.

One-off energy assistance payment

  • Social Services Legislation Amendment (Energy Assistance Payment) Act 2019 makes the below amendments to the Social Security Act 1991Social Security Administration Act 1999Veterans’ Entitlement Act 1986 and the Income Tax Assessment Act 1997.
    • Provide a one-off energy assistance payment to recipients of the age pension, disability support pension, wife pension, carer payment, widow B pension, widow allowance, parenting payment, AUSTUDY payment, newstart allowance, sickness allowance, special benefit, partner allowance, double orphan pension and farm household allowance, the veteran’s service pension and the veteran’s income support supplement, veterans’ disability payments, war widow(er)s pension, and permanent impairment recipients of various veterans’ payments who are payable and residing in Australia on 2 April 2019
    • This payment of $75 for singles and $62.50 for each eligible member of a couple
    • This payment is also tax-exempt and will not count as income for social security purposes.

Bills

Lapsed Bills

The below bills have not passed through Parliament and will lapse.

  • Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 was to make the below amendments to the Income Tax Assessment Act 1997 and the Superannuation Guarantee (Administration) Act 1992.
    • Enable individuals with multiple employers to opt-out of the superannuation guarantee regime to avoid breaching their concessional contributions cap
    • Ensure that the non-arm’s length income rules for superannuation entities apply where non-arm’s length expenses are incurred in gaining or producing the income
    • Amend the definition of the total superannuation balance to include certain loan recourse borrowing arrangements
    • Provide a one-off 12-month amnesty for employers to self-correct historical superannuation guarantee non-compliance.
  • Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018 was to make the below amendments to the Income Tax Assessment Act 1997.
    • Remove the entitlement to the CGT main residence exemption for foreign residents.

Amended bills

Legislative Instruments

Insurance within MySuper

  • Treasury has released a consultation paper seeking feedback on proposed key definitions, terms and exclusions for default MySuper group life policies, as recommended by the Hayne Royal Commission.
  • It has also been recommended that this feedback should consider:
    • higher minimum coverage for life insurance than what is currently provided for by the Superannuation Guarantee (Administration) Regulations 2018;
    • minimum coverage for permanent incapacity insurance;
    • maximum coverage for life and/or permanent incapacity insurance; and
    • a fixed level of coverage for life and/or permanent incapacity insurance so as to set a standard amount of default insurance across all MySuper products.
  • Submissions on this paper are due by 26 April 2019.

Removing grandfathered conflicted remuneration

  • Treasury has released draft regulations for consultation to remove the grandfathering arrangements for conflicted remuneration in relation to financial advice provided to retail clients, as recommended by the Hayne Royal Commission.
  • Financial advisers can currently receive conflicted remuneration for providing financial advice to clients if the remuneration is paid under a grandfathering agreement that was entered into before the application day specified in the Corporations Act (generally 1 July 2013). The proposed changes would remove these arrangements effective from 1 January 2021.
  • Submissions on this paper were due by 25 April 2019.

Regulator views

Australian Securities and Investments Commission

Consumer awareness of general and personal advice

  • The Australian Securities and Investments Commission (ASIC) has released Report 614 Financial advice: Mind the gap that assesses the awareness and understanding of individuals around general and personal financial advice.
  • The findings from this report include:
    • general and personal advice are not familiar concepts for individuals;
    • general and personal advice are not clearly distinguishable concepts for most individuals with 53% of participants correctly identifying general advice and 19% of participants correctly identifying personal advice; and
    • advisers’ responsibilities around general and personal advice is unclear to individuals.

Other

Superannuation thresholds for 2019/20

  • The Australian Tax Office (ATO) has published details of the superannuation-related thresholds that will apply in 2019/20.
  • From 1 July 2019:
    • the low rate cap will increase to $210,000;
    • the capital gains tax cap amount and the untaxed plan cap will both increase from $1,480,000 to $1,515,000;
    • the lower and higher income thresholds for the Government co-contribution will be indexed to $38,564 and $53,564 respectively
  • The annual concessional and non-concessional contribution caps will remain at $25,000 and $100,000 respectively.
  • The transfer balance cap will also remain at $1,600,000 for the 2019/20 year.

Social Security Indexation

  • Indexed rates and thresholds for pensions and allowances, effective 20 March 2019, were released by the Department of Social Services.
  • From this time, the maximum Age Pension increased to $926.20 a fortnight for singles and to $1,396.20 a fortnight for couples combined.
  • The income and assets test thresholds that apply for aged care means testing arrangements have also increased due to indexation.

Related products

Contact us

Monday to Friday 8am – 6pm (Sydney time)

1800 808 508

Talk to us today

To speak to a specialist complete this form and we'll be in touch.

Help and support

Visit our Adviser Help Centre and search our adviser FAQs.

Important information

Macquarie Investment Management Limited (MIML) ABN 66 002 867 003 AFSL 237 492 is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and MIML’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL).  MBL does not guarantee or otherwise provide assurance in respect of the obligations of MIML.

This information is provided for the use of financial services professionals only.  In no circumstances is it to be used by a potential investor or client for the purposes of making a decision about a financial product or class of products.

The information provided is not personal advice. It does not take into account the investment objectives, financial situation or needs of any particular investor and should not be relied upon as advice.  Any examples are illustrations only and any similarities to any readers’ circumstances are purely coincidental. 

While the information provided here is given in good faith and is believed to be accurate and reliable as at the date of preparation, 26 April 2019, it is provided by MIML for information only.  We will not be liable for any losses arising from reliance on this information.

This information is intended only to provide a summary and general overview on matters and does not constitute legal advice. You should seek legal or other professional advice before relying on this information.

MIML and MBL do not give, nor purport to give, any taxation advice. The application of taxation laws to each client depends on that client’s individual circumstances.  Accordingly, clients should seek independent professional advice on taxation implications before making any decisions about a financial product or class of products.

MIML and MBL do not give, nor purport to give, any taxation advice. The application of taxation laws to each client depends on that client’s individual circumstances.  Accordingly, clients should seek independent professional advice on taxation implications before making any decisions about a financial product or class of products.