As I waded through last year’s Australian Budget papers and sat down to write about it all from an expat point of view, I began by saying that it was a typical election budget. Having done the same with Federal Treasurer Josh Frydenberg’s budget speech, I can’t say much different for the 2019 Australian Federal Budget. If you go by the very loud whispers making the rounds, the government is planning a May election, explaining the April budget instead of the usual May announcement.
According to election whiz and green screen extrordinaire Antony Green, the last date that the government can hold an election and avoid a separate House and half-senate election, is May 18. Consider this your warning to ensure your voting details are in order with the Australian Electoral Commission.
2019 AUSTRALIAN BUDGET FOR EXPATS
On a complete side note, has anyone else noticed that Frydenberg seems to be giving potato-head-Peter Dutton a run for his money in the mishapen-shaved-head stakes? Put ’em in a line up and I’d have a hard time telling them apart. But I digress, this isn’t about cueballs, it’s about dollars and cents, and where they’re going in the 2019/20 fiscal year.
Here’s the budget in a nutshell, there’s a cash rebate to low and middle income earners, and infrastructure spending totalling more than $100 billion spread over a decade. That’s how they’re winning voters this election, with a sprinkling of ‘restoring trust in the financial system’ by taking on some of the 75 recommendations made by the Royal Commission into the banking sector. Conveniently forgetting that their party fought tooth and nail to stop that Royal Commission from ever going ahead. They’re going to ‘fix’ the problems that they never wanted to uncover in the first place. But they’re not going to take all of the recommendations – instead it has backed down on ending “trail commissions” for mortgage brokers after intense lobbying from the industry. And there’s the usual ‘maintaining border security’ scaremongering that seems to be the centerpiece of every western world election nowadays.
But as expats you probably want an update on superannuation rules (no, you can’t withdraw early), the capital gains tax initiatives, and changes to visas if you’re considering moving back to Australia and bringing spouses or children with you.
Migration places decrease & application fee increase
From November 2019, the Skilled Migration Points Test will be changed to give additional points to those who are also applying to bring a partner with good English skills, but may not meet the ‘skilled partner’ requirements. Single applicants will also get extra points so they will not be disadvantaged by the change.
Currently, the Skilled Migration Points Test gives additional points to the main applicant when their partner is under 45, has competant English skills, and is qualified for a skilled occupation in their visa class. While they’re making changes, the government is revising the number of migrants it will allow into the country for the next four years. The migration program currently allows for 190,000 immigrants each year, but from the 2019/20 financial year, that will drop to 160,000. The break down will include 108,682 places for skilled migrants, 47,732 places for family migrants and 3,586 places accros child and special eligibility streams.
On top of that news, the base visa application charge for all visas (apart from visitor 600 visas) will increase by 5.4 per cent from July 1, 2019. The government is hoping to rake in an extra $275 million dollars from the start date to the 2021/22 financial year.
Tax Treaty With Israel
Australia has signed tax treaties with many other countries to eliminate expats being double taxed on income and to help prevent tax avoidance. It signed a similar convention with the state of Israel on March 28, 2019 in the hopes of bolstering trade and investment ties with the state. It offers reduced withholding tax rates to encourage bilateral investment and provides greater certainty to taxpayers in both Israel and Australia. Legislation to enshrine the convention in law has not yet been introduced to the Australian Parliament
Managed Investment Trust Withholding
Once again, the government is adding to the list of countries whose residents can access a reduce withholding tax rate of 15 per cent, instead of 30 per cent. If you’d like an explanation of managed investment trust withholding, there is a straight forward one here. Countries that want to be listed must also share taxpayer information with Australia, making it more difficult for expats in those countries to hide their worldwide income. The new countries to be included are:
- United Arab Emirates
These new countries will be held to this agreement from January 1, 2020, and aims to crack down on tax avoidance.
Another year means another slight change to superannuation it seems. The government has agreed to amend the Protecting Your Super package, announced in last year’s budget, to not deem an account inactive until it has not received a contribution for 16 months. It will also require the Australian Tax Office to consolidate superannuation to an active account, within 28 days of it being received.
It is also pushing back the date by which superannuation can only offer insurance on an opt-in basis, for accounts with balances of less than $6,000 and for new accounts belonging to members under the age of 25. Instead of coming into affect for the new financial year, this measure will not be enforced until October 1, 2019.
You can now make voluntary superannuation contributions if you’re aged 65 or 66, without meeting the work test, beginning July 1, 2020. Spouses can make contributions to their partner’s account, as long as the recipient is under 75-years-old. This is a change from the current rule, where those aged between 65 and 74 can only make voluntary contributions if they self-report that they are working a minimum of 40 hours in a 30 day period over the financial year..
Superannuation funds that are thinking of merging currently enjoy tax relief from the government, but tha twas set to expire on July 1, 2020. A budget proposal will make that tax relief permanent, allowing superannuation funds to transfer revenue and capital losses to a new merged fund, and defer tax consequences on those gains and losses. The government said the permanancy would stop fund members from being affected when super funds merge.
Cyber security for Government systems
The government is planning to increase funding to implement cyber security strategies, monitoring and response capabilities across its systems. That includes enhanced security for the 2019 Federal election (coming soon to a consulate near you), and all government systems as a whole, including the online health portal, MyHealth.
The amount of money set to be spent on cyber security will not be released to the public “due to national security reasons”.
Investing in election technology
Almost $11 million has been earmarked (over two years) for the Australian Electoral Commission to replace its existing polling place technology with something more modern. It is listed in the budget as “Information and Communications Technology” infrastructure and could include more online or computerised voting options.
Where the bloody hell are ya?
Let’s hope that the $50 million that the government will provide over the next three years will produce better ads than that one. The money will be pooled with co-contributions from states and territories, and used to enhance and support nationally and regionally iconic tourism infrastructure.