Federal Treasurer Wayne Swan has issued his sixth Budget. Many of the announcements have already been released prior to Tuesday night, however there were still some unexpected initiatives.
Below we have provided a brief summary of the more pertinent points of the 2013 Federal Budget. It is important to note that all announcements will require the passing of legislation before they can be implemented.
Taxation
- Proposed tax cuts scheduled to commence 1 July 2015 have now been deferred.
- The Baby Bonus of $5,000 has been replaced with an increase to Family Tax Benefit Part A. This increase is $2,000 for the first child and $1,000 for each child thereafter. This is due to come into effect on 1 March 2014.
- Medicare Levy to increase by 0.5% to 2.0% of taxable income. This is due to come into effect on 1 July 2014.
- Self-education expense deductions will be capped at $2,000 per annum. This is due to come into effect on 1 July 2014.
- Net Medical Expenses Tax Offset to be phased out.
Superannuation
- Pension earnings exceeding $100,000 to be taxed at 15%. This is due to come into effect on 1 July 2014.
- Higher concessional contribution cap of $35,000 per annum for individuals over 60 years old from 1 July 2013. Individuals aged over 50 years old will qualify for the increased cap from 1 July 2014.
- Excess contributions will be taxed at an individual’s marginal tax rate. This is due to come into effect on 1 July 2013.
Social Security
- New account-based pensions commencing after 1 July 2015 will be deemed, losing their favourable assessment under the income test.
- Allowance recipients (such as Newstart & Sickness Allowance) will be able to earn up to $100 per fortnight (up from $62 per fortnight) before their maximum entitlement is reduced. This is due to come into effect on 20 March 2014.
- Proposed increases to Family Tax Benefit Part A from 1 July 2013 have been removed.
- Family Tax Benefit thresholds and Supplement amounts will be maintained at current levels due to the pausing of indexation.
- Family Tax Benefit Part A eligibility will be limited to children aged 16 and over only whilst they are at school. This is due to take effect on 1 July 2014.
- Late registrations for the Pension Bonus Scheme will be ceased from 1 March 2014.
- A trial has been announced where eligible pensioners can gain a means test exemption when downsizing their family home, including moving into a retirement village or granny flat.
As you can see, announcements have been made to a wide range of areas. To find out how these announcements may impact your own situation, talk to your accountant or financial planner.