Budget 2014 – What Does it Mean for You?

After what has seemed like months of expectation, leaks and rumours – Budget 2014 has finally been released. We’ve

been asked to “share the pain”. In Joe Hockey’s words “the age of entitlement is over and it has been replaced, not with an age of austerity, but an age of opportunity”. The reality is – with the budget in deficit and the government in debt – cuts and tax increases are needed.

How will high income earners will be affected?

– a “Temporary Budget Repair Levy” is what the debt tax that’s not a tax is being called – an increase of 2% in the marginal tax rate for those earning above $180,000 (from 1 July for next 3 years)

– super contributions in excess of the non-concessional cap can be withdrawn with the associated earnings

How will retirees and pensioners (now and in the future) be affected?

– age of eligibility for Age Pension to be increased to 70 by 2035

– untaxed superannuation income will be included for purposes of Senior’s Health Care Card for new recipients

How will business be affected?

– the company tax rate will be cut by 1.5% from July 1

Here are some of the other key announcements:

– cuts to the public service of 16,500 over the next 3 years and 70 government bodies to be abolished

– a $7 co-payment for visits to the GP

– a $20bn Medical Research Future Fund

– $11.6bn for infrastructure projects

– a $10,000 incentive bonus to employers to hire workers over age 50 or those who have been on unemployment or disability support for six months

– from 1 July 2016 new members of the military will no longer enter the defined benefit MSBS but enter an accumulation plan

No change at this stage to tax free super income streams for those over 60 but surely changes in that space are only a matter of time.

You can see my thoughts on the budget here:

A comprehensive summary of the Budget from Tax Banter can be found here.

 

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