2014 BUDGET UPDATE

budget imageOn the 13th May 2014, the Federal Treasurer, Mr Joe Hockey, handed down his first budget. The budget contained only a small number of tax and superannuation measures but in some cases these are quite significant. There were also many changes to the social security and health systems in an effort to reduce the deficit from $49.9b to $29.8b next year.

 

BUDGET – INDIVIDUALS TAX CHANGES

Deficit Tax
A three year temporary levy of 2% will be imposed on individuals’ taxable income in excess of $180,000 pa, from 1 July 2014 until 30 June 2017. This measure is expected to increase revenue by $3.1b over the forward estimates period.

Offsets Abolished
The dependent spouse and mature age worker tax offsets will be abolished for all taxpayers from 1 July 2014.

HECS & HELP Debt Thresholds Lowered
The income threshold at which students commence repayment of their Higher Education Loan Programme (HELP) debts will be reduced to $50,638 with effect from 1 July 2016. In addition, HELP debts will attract interest up to a maximum rate of 6%.

 

BUDGET – COMPANY TAX CHANGES

Reduction in Company Tax Rate
The budget proposed a 1.5% reduction in the company tax rate along with a parental leave scheme of 1.5% to be levied on big companies. But these were not costed out in the budget detail.

R&D tax incentive: rates reduced
The rates of the refundable and non-refundable offsets for the Research and Development (R&D) Tax Incentive will be reduced by 1.5 percentage points.

 

BUDGET – SUPERANNUATION CHANGES

Excess Non Concessional Superannuation Contributions
Individuals will be given the option of withdrawing superannuation contributions in excess of the non-concessional contributions cap made from 1 July 2013 and any associated earnings, with these earnings to be taxed at the individual’s marginal tax rate.

Superannuation Guarantee
The schedule for increasing the superannuation guarantee rate to 12% will be changed. The superannuation guarantee rate will now increase to 9.5% on 1 July 2014. The rate will remain at this level until 30 June 2018. The rate will then increase by 0.5 percentage points each year until it reaches 12% in 2022/23.

 

BUDGET – PENSION AGE & FAMILY TAX BENEFIT

Increase in Pension Age
Various reforms will be introduced to the pension system including increasing the qualifying age for the Age Pension until it reaches 70 years of age for those born after 1965.

Family Tax Benefit Changes
Various reforms to the Family Tax Benefit (FTB) Part A and Part B payments will be introduced, including reducing the FTB Part B primary earner income limit to $100,000 pa and changing certain eligibility requirements.

"Chaffey Power have being dealing with Andrew and his team for over 5 years. During this time Andrew’s advice and guidance has been exceptionally professional, accurate and has exceeded our expectations. Andrew’s expert advice has been highly beneficial and critical to Chaffey Power’s forecasting and budgeting moving forward in the Hire Industry."

- Matt Rouvray,
Operations Manager,
Chaffey Power