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The Federal Treasurer, Mr Joe Hockey handed down the 2014-15 Federal Budget, his keenly awaited first budget, on 13 May 2013 at 7.30pm (AEST). Anticipation was high that significant changes would be announced following the recent release of the National Commission of Audit report and the Government did indeed release its formal response to the Commission’s report.
However, in the event, the Budget was relatively “light on” from a taxation point of view. Although, it did include the expected 2% budget deficit levy and the re-indexation of fuel excise, tax measures were relatively few. Progress on announced but un-enacted measures was however noted.
The 2% budget deficit levy (tax), already the subject of much debate, was a key announcement and the levy will apply from 1 July 2014. However it will apply only on taxable income above $180,000 per annum and it will last for only 3 years.
We encourage you to contact your Walker Wayland advisor if you wish to discuss any aspects of the Budget further.
Individuals and families
A three year temporary levy of 2% will be imposed on individuals’ taxable income in excess of $180,000 per annum from 1 July 2014 until 30 June 2017.
The dependent spouse tax offset (DSTO) for all taxpayers and 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.
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.
The qualifying age for the Age Pension is to be increased to 70 by 1 July 2035 as part of various reforms to the pension system.
The eligibility age for the Newstart Allowance and Sickness Allowance will increase from 22 to 24 years from 1 January 2015.
Reforms to the Family Tax Benefit (FTB) Part A and Part B payments will commence largely from 1 July 2015 including: – reducing the FTB Part B primary earner income limit to $100,000 per annum and changing certain eligibility requirements. – 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. – some transitional arrangements will apply
Changes will be made to the Medicare system relating to patient contributions, indexation of fees and thresholds, and Medicare safety net arrangements.
From 1 July 2014, taxpayers will receive a tax receipt detailing how and where their tax dollars were used.
Two organisations have been added to the list of specifically listed deductible gift recipients.
Round 5 of the National Rental Affordability Scheme (NRAS) will not proceed.
Individuals will be given the option of withdrawing superannuation contributions in excess of the non-concessional contributions cap made from 1 July 2013 together with any associated earnings. These earnings will be taxed at the individual’s marginal tax rate.
The previously proposed timetable for increasing the superannuation guarantee rate to 12% will be changed.