The 2018 Australian Federal Budget has thankfully suggested that very little will change for Australian expats living and working across the globe. Treasurer Scott Morrison handed down the 2018-19 Budget on the 8th May and I have outlined the key changes below that may impact Australian expats.
Tax Rate Changes
The Government has introduced a seven-year personal income tax plan, which will ultimately see the removal of the 37% tax bracket. Therefore, those earning $100,000 – $150,000 will be the biggest benefactors. This is outlined in the table below:
The tax changes will include a Low and Middle-Income Tax Offset, which will cease in the 2021-22 financial year.
Medicare Levy Not Increasing
The Government has announced that they will be remaining with the 2.0% Medicare Levy, rather than increasing it to 2.5%, which was originally proposed.
Work Tests for Superannuation Contributions
Currently, those between 65 and 74 must work 40 hours within a consecutive period of 30 days to be eligible to make superannuation contributions, however from 1 July 2019 it is proposed that those with a superannuation balance of $300,000 and below will be able to contribute providing that they met the requirements in the last financial year.
Opt-Out for SG Contributions
The Superannuation Guarantee contributions currently can cause some problems for higher income earners in Australia ($250,000+), as they can exceed the concessional contribution cap of $25,000 p.a. and face penalties. From 1 July 2018, those with income above $263,157 and with multiple employers will be able to opt-out of contributions above the cap. This could be quite a significant benefit for those planning to work in Australia again and expecting to earn above $250,000 per annum.
Self-Managed Superannuation Fund (SMSF) Changes
While this will not impact many of our clients as expats, it’s handy to understand the implications of the changes to the SMSF rules. The maximum number of allowable members in an SMSF will rise from 4 to 6, and those SMSFs with a sound track record of submitting returns and audit requirements will receive the benefit of a three-yearly requirement for audited reports. If you do operate an SMSF as an Australian expat, it’s important to speak with your accountant and/or financial planner to ensure that you have taken the appropriate steps to ensure it’s compliance.
There could still be changes as these proposals seek to be passed through Parliament, but it gives some guidance of what we can expect.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Adviser with Australian Expatriate Group, specialist division of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian expats in Singapore.
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Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.