Here’s a look at those who gain and those who are likely to feel the pain from this years federal budget. We highlight some of the more significant changes effecting every day Australians in this months issue.
Who Are The Winners?
Small to Medium Business
Cut to the company tax rate of 1.5 per cent from July 1 2015 to 28.5% for companies earning less than $5,000,000 in taxable income.
Older Job Seekers
A new incentive to encourage business to employ older Australians (aged 50+) who were previously on government benefits for at least six months. Employers will receive up to $10,000 over 24 months in Government assistance.
The Paid Parental Leave Scheme will pay new mothers up to $50,000.
Who Are The Losers?
From 1 July 2025, the age pension qualifying age will start rising by six months every two years, from 67 years to 70 years by 1 July 2035.
Age Pension to be increased with CPI rather than the current system linked to wage growth.
Mature Age Worker Offset will be abolished from 1 July 2014 rather than being phased out.
It will be tougher to qualify for the Commonwealth Seniors Health Card from 1 July 2014 and the Seniors Supplement payment will be abolished.
Changes to the deeming rate thresholds from September 2017, meaning more people will be subject to the Centrelink income test.
From 1 July 2015, the Government will reduce the Family Tax Benefit Part B. Primary earner income reduced from $150,000 to $100,000 per annum.
Family Tax Benefit B to be limited to families whose youngest child is younger than six years of age. As a transitional arrangement, families with a youngest child aged six and over on 30 June 2015 will remain eligible for FTB Part B for two years.
From 1 July 2015, bulk billed visits to General Practitioners, blood tests and X-Rays will cost the average tax payer $7 per consult.
The interest rate for HECS and HELP assistance will no longer be set at CPI but instead at the 10 year bond rate (currently around 4%).
The minimum wage at which the debt will need to be repaid will also start earlier from 1 July 2016.
Deregulating of university education fees likely to see education costs increase.
From 1 January 2015, those claiming Newstart Allowance and Youth Allowance will serve a 6-month waiting period.
Increase to the eligibility age for Newstart Allowance and Sickness Allowance from 22 to 24 years of age from 1 January 2015.
High Income Earners
Temporary budget repair levy – for those earing $180,000 per annum or more, you will get slugged a 2% levy on the amount earned over $180,000. Top marginal tax rate effectively becomes 49% (including Medicare levy).
Fringe benefits tax will increase from 47% to 49% from 1 April 2015 until 31 March 2017. If you are currently packaging a car this may impact you.
In a recent poll conducted by the Sydney Morning Herald the following results were published – 24% agreed the budget was “Tough but fair”; a whopping 70% decided the budget is “Too hard on the vulnerable” and only 6% chose to abstain from comment. (*)
All eyes turn now toward the Senate to see how much of the Abbott/Hockey budget will be accepted.
(*) Source – Sydney Morning Herald Online – May 13, 2014.