Whilst there has not been a change to personal income tax rates in the Budget, there has been some significant re-direction of spending to help build a stronger economy.
Temporary Budget Repair Levy
The Government announced the introduction of a Temporary Budget Repair Levy of two per cent on individuals’ taxable income exceeding $180,000. This will apply from 1 July 2014 through to 30 June 2017.
The introduction of this levy means that individuals with taxable incomes exceeding $180,000, and who are liable for the Medicare levy surcharge, will be subject to a top marginal rate of 50.5 per cent of income.
Non residents are also expected to bear the burden of the Temporary Budget Repair Levy.
Australians who have retired will no longer be entitled to some seniors benefits after June this year. Benefits such as telephone, utility allowances and travel allowances are among concessions that will be no longer available.
However, the Clean Energy Supplement, lower co-payments for medicines on the Pharmaceutical Benefits Scheme and access to a lower threshold for the Medicare Safety Net will still be available to eligible seniors.
Age pension linked to CPI
The age pension will be linked to the consumer price index (CPI) rather than the average male weekly earnings from 1 September 2017. Other welfare benefits such as the Disability Support Pension, the carer payment and veterans’ affairs pensions will also be linked.
The CPI is typically lower than the average male weekly earnings which will mean that the value of the age pension will fall over time.
Trade support loans program
The Government will introduce a “trade support loans program” to support apprentices throughout their training.
The program will offer apprentices loans of up to $20,000 at concessional interest rates over a four year apprenticeship. Apprentices will need to begin repaying their loan when their income exceeds a minimum threshold.
The Government will be offsetting the cost of the trade support loans program by scrapping the ‘tools for your trade’ program from 1 July this year.
Worker’s safety net cut
Workers in failed companies will have their government-funded safety net reduced. The changes also cap the maximum payment for redundancy at 16 weeks and freeze for four years the indexation of the scheme’s maximum weekly wage for calculating entitlements.
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