With the Opposition being defeated, their following
superannuation changes will not proceed:
• Individuals under 75 will still be able to claim a deduction
for their after-tax contributions. The Opposition had
proposed to reinstate the 10% rule whereby a deduction
could only be claimed if less than 10% your income was
earned from employment-related activities. Therefore, if you
were thinking of making a personal after-tax contribution,
you may continue to enjoy a tax deduction
• The non-concessional contribution cap will not be reduced to
$75,000. It will remain at $100,000 per year.
• Limited Recourse Borrowing Arrangement (LRBAs) will
not be banned. LRBAs are a highly conditional form of
SMSF borrowing which enable SMSFs, via a separate
holding trust, to acquire shares and property.
• The Division 293 tax threshold will not be lowered to
$200,000 – it will remain at $250,000 Division 293 tax
reduces the tax concession on super contributions. An
individual's income is added to certain super contributions
made during the year, and compared to this dollar threshold.
Division 293 tax is payable on the excess over the threshold,
or on the super contributions, whichever is less. The rate of
Division 293 tax is 15%
• The Superannuation Guarantee rate of 9.5% will not be
increased. The Opposition had proposed to gradually
increase the rate to 12%.
Mark owns a company, Lat Val Pty Ltd, through which he
operates a food manufacturing business in the Latrobe Valley
employing 60 staff. Lat Val Pty Ltd has an aggregated turnover of
$25 million and a taxable income of $900,000 for the 2019/2020
income year. Ordinarily Lat Val Pty Ltd would be too large to
access the instant asset write-off, but the new law means it can
Lat Val Pty Ltd purchases 10 new commercial ovens 31
December 2019, at a cost of $12,000 each, exclusive of GST,
to allow Lat Val Pty Ltd to expand its business and improve
Under the old law, Lat Val Pty Ltd would depreciate the new
ovens using an effective life of 15 years. Choosing to use the
diminishing value method, Lat Val Pty Ltd would claim a tax
deduction of $400 per oven, a total deduction of $4,000 for the
2019/2020 income year.
Under the new $30,000 instant asset write-off, Lat Val Pty Ltd
would instead claim an immediate deduction of $120,000 for the
purchase of the 10 ovens in the 2019/2020 income year, $116,000
more than under the old arrangements. This will help the
business to invest, grow and employ more workers.
HOUSING DEPOSIT SCHEME
During the Election campaign, the Government pledged to help first
home-buyers into the market by topping up their 5% deposits with a
Government guarantee for 15% of the loan.
Single people earning up to $125,000 or couples earning up to
$200,000 will be eligible for this first-home loan deposit scheme if
they have saved 5% of the value of the home.
The Government will set aside $500m of equity through the National
Housing Finance and Investment Corporation to guarantee loans up
to a value of 20% of the home. Buyers won’t need to have a full 20%
deposit and will save around $10,000 by not having to pay lenders
The scheme is limited to 10,000 first homebuyers, roughly one-in-10
of the 110,000 Australians who bought their first home in 2018.
The Government has suggested there will be regional caps on the
value of homes for which it will guarantee a deposit.
Once the first homebuyer has borrowed 95% of the value of the house,
the Government guarantee lasts until the homeowner refinances.
The Opposition also adopted this policy after it was announced, so
therefore there is a high likelihood that it will pass into law when
In the Election campaign, the Opposition announced that it would
introduce an Australian Investment Guarantee, allowing all
Australian businesses to immediately deduct in the year of purchase
and installation, 20% of any new eligible asset. The remaining
balance was to be depreciated under existing rules.
With the Government winning however, the major depreciation
reform that was implemented just prior to the Election will remain in
place. That is, going forward, new purchases of assets under $30,000
can be written off immediately if your business has a turnover of less
than $50 million.
My Tax Savers
ability to contribute on behalf of their spouse, can be particularly
• the recipient spouse is significantly older (as they be may able
to access a tax-free superannuation pension earlier than the
contributing spouse) or
• has a low income (as the contributing spouse may be entitled to a
spouse tax offset) or
• where the contributing spouse is unable to contribute personally
(as they may have already met their contribution limits).
SMSF MEMBER INCREASE
The Government will again move to have six-member self-managed
superannuation funds (SMSFs) legislated (up from the current limit
of four members) despite the proposal being removed from a bill
introduced earlier this year. This will enable more of your family
members or other close associates to join your SMSF. On the plus
side, the greater the pool of funds (that may result from additional
individuals) the greater the ability to invest. On the downside
however, it may be more difficult to manage competing interests of
a larger group of members. For example, younger people may prefer
a higher risk investment settings than an older person in that SMSF
who is nearing retirement.