On 3 May 2016, the Turnball Government delivered its first Federal Budget. It is also the last Federal Budget to be delivered by the current Government given the impending election. According to the Treasurer, this year’s Budget is not an ordinary Budget – rather, it is an economic plan that focuses on three key actions:
- Sticking to the Government’s plans for jobs and growth;
- Fixing specific problems in the tax system (including major superannuation reforms); and
- Continuing to ensure the Government lives within its means.
As true as this may be, it’s important to understand what changes have been proposed, and more specifically, how these changes may impact you. I say “may impact you” as these proposals are just announcements at this stage and the final form of the announcements may differ when they ultimately become law which will not move into law until after the next Federal election.
- People who earn about $80,000.00. Half a million workers earning about $80,000.00 have been given a tax cut. The government is increasing the upper limit for the second highest bracket of 37 cents in the dollar from $80,000 to $87,000.
- Business – Big and Small. Small businesses are getting another tax cut, while big business will get access to the lower tax rate as well – eventually.
- Unemployed Youth. There is an “ambitious” new attempt to get vulnerable young people into jobs called Youth Jobs PaTH – Prepare, Trial, Hire.
- Women. Will be encouraged to build up their super savings if they take time off work to have children. Partners will also get tax offsets.
- Older Aussies. The government will get rid of the requirement that someone aged 65 to 74 years old has to be working to put money into super.
- Smokers. Not only will you have to pay more for smokes, the prices are expected to rise every year and edge towards the $40 pack smokers all fear.
- High-Income Earners. Rich Australians will be slugged with a $2.9 billion tax grab as the government winds back their generous concessions.
- First Home Buyers. Negative gearing, which is contributing to record house prices and pricing first homebuyers out of the market, is here to stay.
- Public Servants. Public servants are facing even more job losses as the government cuts $1.4 billion over the three years to 2019-20.
- DSP recipients. The crackdown on welfare rorting continues. Each year for the next three years, 30,000 Disability Support Pension recipients will have to justify themselves or be kicked off.
Overall, the number of changes announced in this year’s Federal Budget are small compared to prior years. But the changes announced, particularly to superannuation, are significant. The most important consideration you can have right now is to ensure that you don’t over-react to measures that are still only proposals. The best thing you can do is seek advice that is personal to your own circumstances. Please call Madeline at JR Corporate Accountants on 4577 3938 to discuss how the new business changes may affect you or the Superannuation changes proposed.
Content Contributions by PKF – Simon Lally and Herald Sun
Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This Information may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be accurate at its issue date. It should not be considered a comprehensive statement on any matter nor relied upon as such. While such material is published with necessary permission, JR Corporate Accountants does not accept responsibility for the accuracy or completeness of, or endorses any such material. Your individual situation may differ and you should seek independent professional tax advice. It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change or further refinement. The taxation position described in this Federal Budget update 2016 is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. SEC15099C-0516jp