Revenue

Budget Review 2019–20 Index

Andrew Maslaris and Michael Robinson

Total Commonwealth revenue in 2019–20 is estimated to be $513.7 billion, representing a 3.6 per cent increase from 2018–19. This figure is projected to increase by 13.0 per cent over the forward estimates period, to $580.5 billion in 2022–23.

Table 1 below provides a summary of the projected changes to government revenue over the forward estimates period. Table 2 displays these projections as a percentage of total revenue over the forward estimates period.

Table 1: Australian Government general government (accrual) revenue

($ million) 2018–19
(est.)
2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Total individuals and other withholding taxes  228 300  234 100  247 600  266 100  270 000
Superannuation fund taxes  11 320  9 750  13 270  14 820  16 320
Company tax  95 600  100 600  100 800  103 400  106 000
Petroleum rent resource tax  1 250  1 290  1 380  1 400  1 400
Goods and services tax (GST)  68 065  69 630  72 620  76 290  80 240
Total excise and customs duty  39 890  45 260  44 360  46 180  47 920
Major bank levy  1 560  1 610  1 710  1 810  1 910
Other tax revenue  13 100  14 356  14 995  15 620  16 310
Total tax revenue  459 085  476 596  496 734  525 620  540 100
Non-tax revenue  36 711  37 168  37 526  39 086  40 379
Total revenue  495 796  513 763  534 260  564 707  580 480

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2019–20, p. 9-24.

Table 2: taxation (accrual) revenue as a percentage of total revenue

(Per cent) 2018–19
(est.)
2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Individuals and other withholding taxes  46.0  45.6  46.3  47.1  46.5
Superannuation fund taxes  2.3  1.9  2.5  2.6  2.8
Company tax  19.3  19.6  18.9  18.3  18.3
Petroleum rent resource tax  0.3  0.3  0.3  0.2  0.2
GST  13.7  13.6  13.6  13.5  13.8
Total excise and customs duty  8.0  8.8  8.3  8.2  8.3
Major bank levy  0.3  0.3  0.3  0.3  0.3
Other tax revenue  2.6  2.8  2.8  2.8  2.8
Non-tax revenue  7.4  7.2  7.0  6.9  7.0

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2019–20, p. 9-24.

Key figures

All page references in this section refer to Budget Strategy and Outlook: Budget Paper No. 1: 2019–20.

  • Total revenue from taxation is expected to increase from an estimated $495.8 billion in 2018–19 to $580.5 billion in 2022–23.
  • Company tax cash receipts are expected to increase from an estimated $95.6 billion in 2018–19 to $106.0 billion in 2022–23. It is estimated that company tax as a percentage of total tax revenue will fall steadily from a peak of 19.6 per cent in 2019–20 to 18.3 per cent in 2022–23. The company tax projections have factored in an increase in company tax collections due to extending the Australian Taxation Office’s (ATO) Tax Avoidance Taskforce, with most of this flowing through in 2021–22 and 2022–23. However, this is expected to be offset due to several liquefied natural gas (LNG) companies having accumulated tax losses (pp. 4-11–4-12).
  • Total individuals and withholding taxes are expected to increase steadily from $228.3 billion in
    2018–19 to $270.0 billion in 2022–23 despite significant individual tax rate cuts. As can be seen in Table 2 above, despite the tax cuts proposed in the Budget, individual tax as a percentage of total tax revenue is predicted to increase over the forward estimates period. It is noted that despite the package of tax cuts, individuals and withholding tax collections are expected to broadly increase in line with growth prospects in the Australian economy (p. 4-11).
  • Superannuation fund taxes are expected to temporarily drop from $11.3 billion in 2018–19 to $9.8 billion in 2019–20, which is largely attributable to the impact of recent off-market share buybacks (p. 4-12). As can be seen from tables 1 and 2, superannuation fund taxes are expected to steadily increase from 2020–21 to 2022–23.
  • Petroleum rent resource tax collections are projected to remain relatively stable over the forward estimates period. However, these figures have been revised down since the Mid-Year Economic and Fiscal Outlook 2018–19 (MYEFO) to reflect weaker than expected commodity (or oil and gas) prices (p. 4-12).
  • GST collections are forecast to grow from $68.1 billion to $80.2 billion over the four years to
    2022–23. These figures have been revised down since the MYEFO as a result of weaker than expected collections and downward revisions to forecasts for growth in consumption and dwelling investment (p. 4-13).

Table 3: percentage change in (accrual) tax revenues on a year-by-year basis

(Per cent) 2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Individuals and other withholding taxes  2.5  5.8  7.5  1.5
Superannuation fund taxes –13.9  36.1  11.7  10.1
Company tax  5.2  0.2  2.6  2.5
Petroleum rent resource tax  3.2  7.0  1.4
GST  2.3  4.3  5.1  5.2
Total excise and customs duty  13.5 –2.0  4.1  3.8
Major bank levy  3.2  6.2  5.8  5.5
Other tax revenue  9.6  4.5  4.2  4.4
Total tax revenue  3.8  4.2  5.8  2.8
Non-tax revenue  1.2  1.0  4.2  3.3
Total revenue  3.6  4.0  5.7  2.8

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2019–20, p. 9-24.

Major revenue announcements

All page references in this section refer to Budget Measures: Budget Paper No. 2: 2019–20.

  • Personal income tax reduction package proposed significant reforms to the personal income tax system. The major changes proposed include:
    • from 1 July 2019 until 30 June 2022 the base low and middle income tax offset (LMITO) payment will be increased from $200 to $255, and the maximum LMITO payment will increase from $530 to $1,080
    • from 1 July 2022 to 30 June 2023 the low income tax offset (LITO) payment will be increased from $645 to $700 to an earnings threshold of $37,000. The initial rate of phase-out of the LITO will reduce from 6.5 cents per dollar of earnings to 5 cents per dollar of earnings for taxpayers earning between $37,500 and $45,000, with the final rate of phase-out occurring at the rate of 1.5 cents per dollar of earnings
    • from 1 July 2022 the 19 per cent marginal tax bracket will be extended from $41,000 to $45,000 and
    • from 1 July 2024 the 37 per cent tax bracket will be abolished and a new 30 per cent tax bracket will be created for all individuals earning between $45,001 and $200,000 (pp. 16–18).

      Additional information about the proposed changes can be found below. The Government has also published a tax relief estimator which shows annual reduction in tax and annual tax liability.

  • Increasing the instant asset write-off to assets valued at $30,000 (increased from $25,000) and extending the instant asset write-off to all businesses with annual turnover of $50 million or less (increased from $10 million or less). This means that from 7.30 pm on 2 April 2019 (Budget night) until 30 June 2020, businesses with annual turnover of $50 million or less will be able to claim an immediate tax deduction for eligible business assets that cost $30,000 or less (pp. 14–15).
  • Establishing the Emergency Response Fund to fund natural disaster recovery and response initiatives above and beyond existing programs. Between 2019–20 (starting on 1 October 2019) and 2023–24 the fund will make available up to $150 million, subject to government approval. The Emergency Response Fund will be established with $3.9 billion of uncommitted funds currently in the dormant Education Investment Fund (p. 8).
  • ATO Tax Avoidance Taskforce to receive $1 billion over four years. The Taskforce will target large corporates, multinationals, and high-wealth individuals and is estimated to increase the underlying cash balance by $2 billion over the forward estimates period. The Government has also committed $24.2 million in 2018–19 to the Department of Treasury to conduct a communications campaign focused on improving the integrity of the tax system (pp. 24–25).
  • Additional ATO funding of $41.8 million over the forward estimates period to increase engagement and on-time payment of tax and super liabilities for larger businesses and high-wealth individuals. This is expected to increase the underlying cash balance by $103.6 million over the forward estimates period (p. 25).
  • Certain compensation payments for natural disasters to be tax exempt, including payments made to Primary Producers in the recent Queensland storms and Category C and D grants for the North Queensland floods paid to primary producers, small businesses and not-for-profit organisations (pp. 19; 22).

PERSONAL INCOME TAX RATES—PROPOSED CHANGES 17-18, 18-19, 19-20 BUDGETS

Bolded numbers indicate changes.

1 July 2017 to 30 June 2018
Rates Previous Thresholds 18-19 Budget Thresholds 19-20 Budget Thresholds
Nil Up to $18,200 Up to $18,200  
19% $18,201 to $37,000 $18,201 to $37,000  
32.5% $37,001 to $87,000 $37,001 to $87,000  
37% $87,001 to $180,000 $87,001 to $180,000  
45% Above $180,000 Above $180,000  
1 July 2018 to 30 June 2019
Rates Previous Thresholds 18-19 Budget Thresholds 19-20 Budget Thresholds
Nil Up to $18,200 Up to $18,200 Up to $18,200
19% $18,201 to $37,000 $18,201 to $37,000 $18,201 to $37,000
32.5% $37,001 to $87,000 $37,001 to $90,000 $37,001 to $90,000
37% $87,001 to $180,000 $90,001 to $180,000 $90,001 to $180,000
45% Above $180,000 Above $180,000 Above $180,000
  1 July 2022 to 30 June 2023
Rates Previous 18-19 Budget Thresholds 19-20 Budget Thresholds
Nil Up to $18,200 Up to $18,200 Up to $18,200
19% $18,201 to $37,000 $18,201 to $41,000 $18,201 to $45,000
32.5% $37,001 to $87,000 $41,001 to $120,000 $45,001 to $120,000
37% $87,001 to $180,000 $120,001 to $200,000 $120,001 to $200,000
45% Above $180,000 Above $200,000 Above $200,000
  1 July 2024 to 30 June 2025
Rates Previous threshold 18-19 Budget Thresholds 19-20 Budget
Rates Thresholds
Nil Up to $18,200 Up to $18,200 Nil Up to $18,200
19% $18,201 to $37,000 $18,201 to $41,000 19% $18,201 to $45,000
32.5% $37,001 to $87,000 $41,001 to $200,000 30% $45,001 to $200,000
37% $87,001 to $180,00   
45% Above $180,000 Above $200,000 45% Above $200,000

LMITO CHANGES—1 July 2019 to 30 June 2022

  18-19 Budget 19-20 Budget
LMITO Payment Base $200 for taxable income of $37,000 or less $255 for taxable income of $37,000 or less
Increase 3c per dollar increase between $37,001 and $48,000 7.5c per dollar increase between $37,001 and $48,000
LMITO Payment Maximum $530 $1,080
LMITO phase out 1.5c reduction for every dollar between $90,000 and $125,333 3c per dollar reduction for every dollar between $90,000 and $126,000

LITO CHANGES—1 July 2022 to 30 June 2023

  Prior to 18-19 Budget 18-19 Budget 19-20 Budget
LITO Payment $445 $645 $700
Withdrawal stage 1 1.5c from $37,000 to $66,667. 6.5c for every dollar from $37,500 to $41,000 5c for every dollar from $37,500 to $45,000
Withdrawal stage 2   1.5c from $41,000 to $66,667. 1.5c from $45,000 to $66,667.

Medicare levy—low-income thresholds for CPI from the 2018-19 income year

  18-19 Budget 19-20 Budget
Singles $21,980 $22,398
Family $37,089 $37,794
Single Seniors and pensioners $34,758 $35,418
Family seniors and pensioners $48,385 $49,304
Family uplift per dependent child or student $3,406 $3,471

 

All online articles accessed April 2019

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