Morgan Stanley
  • Ideas
  • Apr 3, 2019

Federal Budget 2019 Overview

We look at the key measures announced in the 2019-20 Federal Budget.

The 2019-20 Federal Budget was tabled last night by the Treasurer, Josh Frydenberg. The Budget delivered the first expected surplus since 2008 offering personal tax cuts, cash handouts for energy payments and infrastructure spending. With an election due to be called in May, it is unlikely that most announcements will be passed prior to the election, except for the proposed tax cuts which are likely to be accelerated.

Please keep in mind that as with any release on Federal Budget night, the measures outlined below are only proposals at this point. Further legislative review is required prior to any of changes becoming law.

Some of the key economic points of the Federal Budget include:

  • The projected budget surplus for 2019-20 is $7.1 billion
  • $100 billion infrastructure spend over the next decade
  • Immediate tax relief for low and middle income earners


Personal Taxation

  • An increase to the low and middle income tax offset to $1,080 (currently $530), effective immediately.
  • Increase in the 19% tax bracket to $45,000 from 1 July 2022 (currently $37,000).
  • Increase to the low income tax offset to $700 (currently $445) from 1 July 2022.
  • Reduction in the 32.5% tax bracket to 30% from 1 July 2024.
  • Continuing plans to abolish the 37% tax bracket from 1 July 2024.



  • Work test abolished for individuals under age 67 from 1 July 2020.
  • Extension of the eligibility to receive spouse contributions to age 74.

Retirees / Older Australians

  • Energy Assistance Scheme - $75 per single or $125 per couple for those receiving qualifying payments.
  • $282 million for care at home packages.
  • An additional 13,500 aged care places.

Small Business

  • Instant asset write off increased from $25,000 to $30,000 immediately.
  • Turnover test for instant asset write off increased from $10 million to $50 million.
  • Tax rate for companies with turnover under $50 million will reduce from 27.5 percent to 26 per cent next year and 25 per cent by 2021-22.

What could happen under a change of Government?

  • Capital gains tax discount – reduced from 50 per cent to 25 per cent for individuals.
  • Top marginal tax rate – increasing from 45 per cent to 47 per cent.
  • Negative gearing – restricted to new housing only, grandfathering applied. Losses related to investments limited to offsetting income from investments
  • Franking credits – no longer refundable after 30 June 2019.
  • Trust distributions – minimum tax rate of 30 per cent applies to trust distributions.
  • After tax super contributions – reduced to $75,000 pa (currently $100,000 pa)
  • Catch up concessional contributions – abolished.
  • Limited recourse borrowing arrangements – prohibited.


For more on what the Federal Budget means for you and your financial plan, speak to your Morgan Stanley financial adviser. Plus, more Ideas from Morgan Stanley’s thought leaders.