14/5/2014

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?

Individuals:

• 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.

Business:

• 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.

Superannuation:

• 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.

 

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