In a tough budget year there is no good news for individuals.
Bracket creep will be used to raise revenue over the four year
budget forecast period. Medicare levy and the FBT rate will
increase by 0.5% to fund the DisabilityCare initiatives and the
Government continues to wind back superannuation concessions.
Bracket creep will be used to
raise revenue over the four year budget forecast
The proposed income tax reductions that were to take effect from
1 July 2015 have been deferred. Once again bracket creep is being
used to fund expenditure. The tax rates for residents are:
nil to $18,200
$18,201 to $37,000
$37,001 to $80,000
$80,001 to $180,000
$180,001 and above
Fringe Benefits Tax
Rate increases to 47%; an increase of 0.5% to match the increase
in medicare levy to fund DisabilityCare.
Family Tax Benefit Part A and Baby Bonus
The proposed boost to the Family Tax Benefit Part A (which was
to increase by $300 for those with one child and $600 for those
with more) has been scrapped. This will save $1.8 billion over
The Baby Bonus has been scrapped and there are significant
reforms to the Family Tax Benefit Part A and Paid Parental Leave
that may compensate some parents.
The Government has looked to
wind back the superannuation concessions.
The Government has argued that the tax concessions provided
under the superannuation system are unsustainable and have looked
to wind back these concessions.
Initially, in the prior year Federal Budget the Government
announced taxing super contributions by tax payers earnings greater
than $300K at a 30% tax rate (instead of 15%).
In a press release on 5 April 2013, the Government has looked to
further wind back these tax concessions by:
taxing superfunds in pension mode with annual earnings greater
than $100,000 at 15% from 1 July 2014. There are still a number of
technical issues that are required to be resolved such as "How
to deal with multiple accounts?";
introducing capital gains tax on assets held in superfunds in
pension mode. The transitional rules will not tax capital gains on
assets held at the date of the announcement until 2024. Any assets
acquired after 1 July 2014 will be fully subject to capital gains
For assets that are purchased from 5 April 2013 to 30 June
2014, individuals will have the choice of applying the reform to
the entire capital gain, or only that part that accrues after 1
providing the same concessional tax treatment to investment
annuities that applies to investment earnings on superannuation
simplifying the proposed higher concessional contributions cap
that had been proposed for individuals with less than $500,000 in
super. This has been able to generate budget savings by reducing
the cap to $35,000 but allowing it to be accessed by anyone that
meets certain age conditions. It will apply from 1 July 2013 for
people aged over 60 and 1 July 2014 for those aged over 50.
Fortunately, the extremely annoying tax on excess super
contributions is to be rectified by taxing the excess contributions
at a person's marginal tax rate (plus an interest charge)
rather than at the top marginal tax rate. Individuals will also
have the choice of withdrawing any excess concessional
contributions from their super fund.
Whilst spending cuts are a priority the Government has found
funds to provide a funding boost to crack down on 457 scheme abuse.
Whilst there will always be isolated incidences of rorting of any
Visa scheme our experience is that 457 Visas are not being widely
abused and the Government has not been able to provide any evidence
of wide spread rorting.
This appears to be a populist political initiative to appease
unions and we believe that there would be more worthy areas to
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