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An overview of the Australian Federal Budget 2014. Warwick Gilbertson, from Turnbull Hill Lawyers, looks at the highlights and explains what the budget means for individuals, families and businesses.
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Federal Budget 2014
What does it mean for you?
May, 2014
Budget 2014 – Highlights (1)
1. A Temporary Budget Repair Levy is being introduced for three years starting on 1 July 2014, levied at two percent of taxable income in excess of $180,000.
2. The schedule for increasing the Superannuation Guarantee rate is being adjusted.
3. Changes will be made to the income threshold, rate of repayment and the indexation rate of HELP loans, essentially requiring them to be repaid sooner.
Budget 2014 – Highlights (2)
4. Significant changes to Medicare subsidies and safety net arrangements will be made, including a $7 fee to visit the doctor and increased co-payments on prescription medicines.
5. Trade Support loans of up to $20,000 over four years will be available to certain apprentices.
6. First Home Saver Accounts have been abolished as of Budget night.
Budget 2014 – Highlights (3)
7. Excess after-tax superannuation contributions will be able to be withdrawn from superannuation without paying excess non-concessional contributions tax.
8. The age pension age will be gradually increased to 70.
9. Research and Development incentives will be reduced by 1.5 percent.
10. Up to $10,000 will be available to employers who put on a mature age job seeker (replaces the Mature Age Worker Tax offset).
Budget 2014 – Important Note
The Treasurer, Joe Hockey, referred to a 1.5 percent cut in the company tax rate from 1 July 2015 (from 30 to 28.5 percent) in his Federal Budget 2014 speech.
This was a Coalition election commitment that, for reasons unknown, was not costed in the Federal Budget 2014.
It’s status is therefore unknown.
If you are an individual…
Who earns more than $180,000 per annum…
You will pay an additional two percent of your taxable income in excess of $180,000 in the form of a Temporary Budget Repair Levy. This levy will apply from 1 July 2014 until 30 June 2017.
If you are an individual…
Who works…
The rate at which your employer must contribute super on your behalf will increase from 9.25 per cent to 9.5 per cent on 1 July 2014, will remain at 9.5 per cent until 30 June 2018 and then increase by 0.5 percentage points each year until it reaches 12 per cent.
If you are an individual…
Who pays tax…
You may not have to pay the Medicare levy this year. From 1 July 2013 the Government will increase the Medicare levy low income threshold for families to $34,367 (from $33,693).
The additional amount of threshold for each dependent child or student will also be increased to $3,156 (from $3,094). This means that you can earn more before triggering a liability to pay the Medicare levy.
If you are an individual…
Who pays tax…
And your access to certain tax offsets may be restricted – the dependant spouse and mature age worker tax offset are to be abolished, and the income threshold for the Dependent (Invalid and Carer) Tax Offset is to be reduced.
If you are an individual…
And you or your family gets sick…
You will likely have to meet more of the cost of getting better. From 1 July 2015 you will have to pay to visit the doctor - $7 for each visit.
The amount you must contribute to prescription medicines will also be increased
If you are an individual…
And you or your family gets sick…
The Medicare Safety Net is to be reformed - according to the Federal Budget 2014, the new Safety Net will have lower thresholds for most people, and safety net benefits and fees that count towards safety net thresholds will be capped.
Finally the income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate will be frozen for three years from 1 July 2015.
If you are an individual…
Who is studying…
Repayment of your Higher Education Loan Programme (HELP) debts will kick in at a lower income threshold (90 per cent of the minimum threshold that would otherwise have applied in 2016-17 - estimated to be $50,638 in 2016-17), and you will have to apply two percent of your repayment income to the debt.
If you are an individual…
Who is studying…
Furthermore, the annual indexation applied to HELP debts will be higher than CPI from 1 June 2016 (but no more than six percent per annum).
If you are an individual…
Who is an apprentice…
You may be eligible for financial assistance of up to $20,000 over a four year apprenticeship in the form of a Trade Support Loan, which will be provided at concessional interest rates.
If you are an individual…
Who is saving to buy a home…
It might take you a bit longer. Any First Home Saver Accounts opened from Federal Budget 2014 night (13th May, 2014) will not be eligible for concessions.
If you are an individual…
Who puts money into super…
And you exceed your cap on making after-tax contributions, you will be able to withdraw those contributions so that no excess contributions tax will be payable. Earnings on those contributions will be taxed at your marginal tax rate.
If you are an individual…
Who is hoping to retire…
You may have to wait longer to qualify for the Age Pension. From 1 July 2025, the Age Pension qualifying age will rise gradually until it reaches a qualifying age of 70 years by 1 July 2035. You will not be affected if you were born before 1 July 1958.
If you are a family…
Who is eligible for Family Tax Benefit…
You may be impacted by various reforms to FTB Part A and Part B payments, including a tightening of income thresholds and a two year freeze on rates.
If you are a business…
That employs people…
From 1 July 2014, you will receive a payment of up to $10,000 when you hire a mature aged job seeker, aged 50 years or over who has been receiving income support for at least six months.
If you are a business…
Undertaking R&D…
Your R&D tax incentive will be reduced by 1.5 percent from 1 July 2014 (from 45 to 43.5 percent for refundable tax offsets available to eligible entities with an aggregated turnover of less than $20 million, and from 40 to 38.5 percent for non-refundable tax offsets available to all other eligible entities).
Whoever you are…
Your affairs are less likely to be picked up by the ATO through third party data matching – at least for the time being.
The Government is deferring until 1 July 2016 the creation of new third party reporting regimes in relation to taxable government grants and specified other government payments; sales of real property, shares (including options and warrants) and units in managed funds; and sales through merchant debit and credit services.
Turnbull Hill Lawyers – Contact Us
If you have any further questions about the Australian Federal Budget 2014 or you'd like to discuss a related matter, please do not hesitate to call Warwick Gilbertson on: 1800 994 279 or email him.
We will endeavour to respond to your enquiry within 24 hours.
