The 2014 Federal Budget was released last night with no real surprises after so many pre-budget announcements. The Federal Government is intending to reduce the budget deficit from $49.9b to $29.8b. So how will it affect you?
A 3 year temporary budget deficit levy of 2% will only be imposed on individuals’ taxable income that exceeds $180,000. This levy will commence on 1 July 2014 and cease on 30 June 2017.
The Medicare levy will increase to 2% on 1 July 2014.
The dependent spouse and mature age worker tax offset will be abolished from 1 July 2014. The income threshold at which the repayment of HELP/HECS debts will be reduced with effect from 1 July 2016. The new income threshold is estimated to be $50,638.
HELP/HECS debts will be indexed at a rate equivalent to the yield on 10 year government bonds to a maximum of 6% instead of CPI from 1 June 2016.
The qualifying age for the government age pension will be increased to 70 years by 1 July 2035. These changes will not affect those born before 1 July 1952.
Changes to the Family Tax Benefit Part A and Part B commencing 1 July 2015.
A Medicare co-contribution payment of $7 will be paid when you go to the doctor, pathology and x-ray services. People with a concession card and children under 16 years of age will only have to pay the co-contribution for the first 10 visits to the doctor, pathology and x-ray services. This will come into effect on 1 July 2015.
A tax receipt for individuals will be introduced from 1 July 2014 to tell us what our tax has been spent on!
The fuel excise will be indexed biannually to the CPI commencing 1 August 2014.
The superannuation guarantee rate will increase to 9.5% on 1 July 2014 and will remain at this level until 30 June 2018. After this time it will increase by 0.5% per year until it reaches 12%.
The Government has confirmed that it is committed to cutting the company tax rate by 1.5 percentage points to 28.5% from 1 July 2015. Companies with taxable income of more that $5M will pay an additional levy of 1.5% to fund the paid parental leave scheme.
The FBT rate will be increased from 47% to 49% effective 1 April 2015 until 31 March 2017.
The refundable R&D tax offset will be reduced to 43.5% and the non refundable R&D tax offset will be reduced to 38.5% from 1 July 2014.
Employers who hire a job-seeker aged 50 or older on the Government’s “Restart” program can receive up to $10,000 in Government assistance. This will commence 1 July 2014.
Individuals will be given the option of withdrawing superannuation contributions in excess of the non-concessional contributions cap made from 1 July 2013 and any associated earnings, with these earnings to be taxed at the individual’s marginal tax rate.
If the excess contributions are not taken out, the excess contributions will continue to be taxed at the top marginal rate.
There are no changes announced impacting on contribution limits, pension withdrawals and taxation of funds.