The 2019 Federal Budget has now been announced.
We have summarised below the key changes that will be specifically relevant to you as a Doctor.
Please remember that this is a pre-election Budget and the current Coalition government will need to win the election and then get through these changes through the Senate.
As such, it’s all a “big maybe”. If the Coalition does not win the federal election (expected to be no later than 18 May 2019) and/or the changes are not passed in the Senate, the following may not proceed.
The key changes within the Budget of potential relevance to you are:
Health – Overview of Some Key Changes
The proposed Budget measures include:
- Indexing ultrasound and X‑ray diagnostic imaging services from 1 July 2020 for the first time in 20 years.
- The re‑introduction of indexation for all remaining General Practitioner services on the Medicare Benefits Schedule;
- Increased mental health, aged care and medical research funding
- Listing more medicines on the PBS to help with the treatment of specific cancers.
- Some additional funding for a few select hospitals and health care centres.
For Doctors in specific areas of medicine, this should mean better patient outcomes, a slight increase in remuneration (Radiologists, GPs, and possibly Psychiatrists and Geriatricians) and perhaps greater demand for medical services.
‘Guaranteeing Medicare’ — improving transparency of out‑of‑pocket costs
The Government will provide funding to increase the availability of information on medical out‑of‑pocket costs.
Information will be provided nationally, with an initial focus on specialist fees for gynaecology, obstetrics, and cancer services. Further information can be found here: http://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2019-hunt035.htm
Possibly greater scrutiny by patients of out-of-pocket fees which are higher than other Specialists in the geographical area.
Lower Income Tax
There will be an increase in the low-income tax offset (LITO) — essentially a lump sum payment to you via your tax return.
Immediate additional tax relief has been provided to low and middle-income earners with an increased LMITO of up to:
- $1,080 for single earners
- $2,160 for dual income families
This will apply to 2018-19 to 2021-22 personal income tax returns and is therefore may be available for taxpayers lodging their returns as early as 1 July 2019.
The full tax relief of $1,080 is available to individuals with taxable income between $48,000 and $90,000. Taxpayers with income below this level will be eligible for an offset of between $255 and $1,080.
From 1 July 2022, the Government will extend the threshold for the 19 percent tax rate from $41,000 to $45,000, and the 32.5% tax rate from $90,000 to $120,000, as per below:
|$0 – $18,200||Nil||$0 – $18,200||Nil|
|$18,201 – $37,000||19%||$18,201 – $45,000||19%|
|$37,001 – $90,000||32.5%||$45,001 – $120,000||32.5%|
|$90,001 – $180,000||37%||$120,001 – $180,000||37%|
By 2024-25, that threshold will be eliminated and those earning $45,001 to $200,000 will face a top tax rate of no more than 30% (plus the Medicare Levy).
High-income earners will receive some minor tax relief. However, Doctors who are still training, and lower earning partners and family members will benefit most from the proposed income tax changes.
Increase and extension of the $20,000 instant asset write-off for small businesses
Increasing the proposed $25,000 (currently before Parliament and is yet to be legislated) to $30,000, and extending this from Budget night until 30 June 2020.
The threshold applies on a per asset basis. This means eligible businesses can instantly write off multiple assets.
This should include most self-employed Doctors.
So long as you satisfy the eligibility criteria, you will be able to immediately deduct the purchase of eligible assets costing less than $30,000 where they are first used or installed ready for use by 30 June 2020 e.g. medical or computer equipment.
The Budget increases the government’s infrastructure spending commitments with a focus on additional funding for transport infrastructure to reduce congestion, improve road safety and provider faster commuter and freight connections between cities and regions.
This may be good news for property investors who have well located properties near new key infrastructure.
With the federal election looming and any proposed changes need to get through the Senate, all of the proposed changes remain a “big maybe”.
If Labor wins the federal election, their proposed key tax policies which may affect you, include:
- Negative gearing restricted to newly-built housing – to apply from 1 January 2020.
- Reduction in the capital gains tax discount for assets acquired by individuals – to apply from 1 January 2020.
- Franking credits – cash refunds of franking credits to be disallowed, with some exemptions to apply.
- Deduction for tax agent fees for individuals to be capped at $3,000.
As with any change in the legislation, there are still, and always will be, strategies to make the most of the changes, and even emerge in a better financial position than before.
Please feel free to contact us if you have any questions or would like to discuss this.