The lead-up to this year’s Federal Budget 2015 /16 was dominated by talk of cutbacks and measures to bring long-term spending growth under control. It seems that the budget was completely different to what was anticipated!
What are the key changes and what do they mean to me?
Below is a high level summary of the stand-outs from this year’s budget. You will also find further explanation and more details in the attachment to this email if you would like to read more.
Don’t forget, these are only proposals at this stage and may still change as legislation passes through parliament.
1. Superannuation
- No changes to superannuation were noted in the budget, which is good news.
2. Taxation
- There have been no changes to personal tax rates tabled in the budget.
- There are some tax deductions proposed for small business owners, notably a 1.5% tax reduction for companies with turnover less than $2 million, and a 5% tax deduction for sole traders with turnover less than $2 million (up to a maximum of $1,000 pa in tax credit).
- Small businesses will be able to immediately deduct new assets costing up to $20,000 each (Cars, home office equipment and electronic equipment such as phones and laptops). This change applies from budget night 2015 (12 May 2015) to 30 June 2017 and will cost the government around $1.75 billion.
3. Social Security
- Aged pension assets test rules will change effective from 1 January 2017. Asset limits for receiving a full pension will increase dramatically, whilst asset test cut-out limits will drop significantly.
- The government estimates this will mean 91,000 people will stop having access to part pensions and a further 235,000 people will have their part pensions decreased.Those who will lose their pension, the government will guarantee eligibility for the Commonwealth Seniors Health Card (CSHC), which provides the same concessional access to pharmaceuticals as those on the pension.
(Asset levels are as per the proposed 2017 figures)
Our office will work with clients in 2016 to determine the impact and look at ways to maximise entitlement in light of the changes.
4. Older Australians – Self-funded
- No major changes noted in the budget apart from the age pension threshold changes noted above.
5. Families
- Effective 1 July 2017, a new means and activity tested Child Care Subsidy will replace the existing rebates. This will range from 85% of the actual fee per child (for family incomes of up to $65,000), down to 50% of the fee (for families earning up to approximately $170,000 or more). A cap on subsidies of $10,000 per child is to apply for families with income of $185,000 and above.