Please find a summary of the significant announcements from the Federal Government's 2014 Budget, followed by further details. Certainly an interesting budget; and “heavy lifting” appears to be the catch cry. There are some key changes that may require some immediate action so please call us to discuss how these changes impact upon, you, your business and your superannuation.
2014/15 Federal Budget Highlights
The Federal Treasurer, Mr Joe Hockey, handed down his first budget at 7:30 pm (AEST) on 13 May 2014. In a budget intended to reduce the deficit from its current $49.9b to $29.8b next year, he said that he was “delivering balanced and credible budget repair”. The budget contained few tax and superannuation measures but included a range of austerity measures, especially in relation to social security and health.
Here are the tax, superannuation, social security and health highlights, or alternatively click here for full budget details on these areas.
Individuals and families
- A three year temporary levy of 2% will be imposed on individuals’ taxable income in excess of $180,000 pa, from 1 July 2014 until 30 June 2017.
- The dependent spouse tax offset (DSTO) will be abolished for all taxpayers from 1 July 2014.
- The mature age worker tax offset will be abolished from 1 July 2014.
- The Medicare levy low-income threshold for families will be increased from the 2013/14 income year.
- The First Home Saver Accounts scheme will be abolished from 1 July 2015.
- From 1 July 2014, taxpayers will receive a tax receipt showing how and where their tax dollars were used.
- The income threshold at which students commence repayment of their Higher Education Loan Programme (HELP) debts will be reduced with effect from 1 July 2016. In addition, HELP debts will be indexed at a rate equivalent to the yield on 10-year government bonds (up to a 6% maximum) instead of CPI from 1 June 2016. Loan fees for undergraduate FEE-HELP and VET FEE-HELP will be abolished.
- Various reforms will be introduced to the pension system including increasing the qualifying age for the Age Pension to 70 by 1 July 2035.
- The eligibility age for the Newstart Allowance and Sickness Allowance will increase from 22 to 24 years from 1 January 2015.
- Various reforms to the Family Tax Benefit (FTB) Part A and Part B payments will be introduced, including:
- reducing the FTB Part B primary earner income limit to $100,000 pa and limiting it to families whose youngest child is less than 6 years old at 1 July 2015.
- A new $750 allowance will be introduced for single parents on the maximum FTB Part A rate, but who will no longer receive FTB Part B payments due to eligibility changes.
- Capping the payment rates as they stand as at 1 July 2014 for two year.
- These measures largely commence on 1 July 2015, with some transitional arrangements.
- Changes will be made to the Medicare system relating to patient contributions ($7.00), indexation of fees and thresholds, and Medicare safety net arrangements.
- Round 5 of the National Rental Affordability Scheme (NRAS) will not proceed.
Companies & Finance
- The rates of the refundable and non-refundable offsets for the R&D Tax Incentive will be reduced by 1.5 percentage points.
- 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.
- The superannuation guarantee rate will increase to 9.5% on 1 July 2014 and will remain at that level until 30 June 2018.
Response to the National Commission of Audit Report
- The government has outlined its response to the National Commission of Audit Report.
For help and advice on how the budget may affect you, your business and your superannuation speak with our friendly team of accountants on 02 4926 2300 or email firstname.lastname@example.org