2014 Australian Federal Budget Update
The feeling most experienced in waiting for this year’s Federal Budget was similar to anticipating your upstairs neighbours’ other boot to hit the floor: irritating. But now that it’s ‘dropped’, we can finally stop agonising over what might be included and make the best out of what actually is in it.
Of course, there’s no way I can cover every aspect of the Budget, but I want to draw your attention to some points I feel are quite important. I urge you to review each section that applies to you; as there are some pretty major changes to be implemented soon.
Before you dive into this section, I want to highlight that, although incorporated into the Budget, none of the below items will become effective until they pass Senate and receive Royal Ascent. With that said, let’s get a move on:
- An increase from 1.5% to 2% in the Medicare Levy will be effective from 1 July 2014.
- There will also be a Temporary Budge Repair Levy of 2% for taxable incomes over $180,000 per annum, again starting the day after the financial year ends.
- A reduction in the Family Tax Benefit (Part B) income threshold from $150,000 to $100,000 per annum.
- The minimum repayment threshold for the Higher Education Loan Program (HELP) has been reduced to $50,638; furthermore, indexation will adjust from CPI to an interest rate equivalent to 10-year bonds.
Do you know if any of these items affect you or your family? Have you heard or seen anything in the Budget that concerns (or confuses) you? Be sure to reach out so we can help you get clear on these new changes.
- The timing for the Superannuation Guarantee Rate Increases from 9.25% to 12% will be changed.
- Also, the Superannuation Excess Contributions Tax (from 1 July 2013)has had some changes made to it: individuals can now withdraw excess contributions, over the non concessional rate, if they choose and have them taxed at their marginal tax rate.
Whether you’re an employer or employee, a thorough understanding of Superannuation Guarantee obligations and benefits is imperative to get the most out of them. You’d be amazed at how quickly a professional accountant can clear up uncertainty.
- Company Tax Rates will receive a welcome cut of 1.5% from 1 July 2015.
- An increase to 49% will be placed on Fringe Benefits Tax (FBT) for the period between 1 April 2015 to 31 March 2017.
- The Employers Hiring Australians 50 Years of Older incentive has a new Subsidy of $10,000 over 24 months as long as the employee has been on income support for at least six months from 1 July 2014.
As a business owner, do any of the above points grab your interest? If not, they should! It’s time to crawl out of the dark and learn about the pros and cons of this new Budget, and how we can use it to your business’s advantage.
Other Items of Note
- The Age Pension Qualifying Age will continue to increase by six months every two years, which means that by 1 July 2035 the qualifying age will be 70 years.
- From 1 September 2017 Indexing Pensions to CPI, rather than wages, will commence.
- The Innovation Investment Fund and Commercialisation Australia program has been axed.
- An extension was granted to the Unfair Contract Provisions to small business.
Again, this is far from an all-inclusive list of the Budget’s contents, but they’re the ‘big ones’ I think will affect most people. So from here, there are a few lines of action you can follow:
The first: to either simply ignore (or continue to be confused about) these important changes – and then be very (very) sorry come this time next year or later down the track. I know I’m biased, but I don’t recommend you take up this option for your own sake!
The second: dive into the Budget Website to further understand it. Of course, that’s only if you can decipher the voluminous, technical, and overly detailed information presented within: https://www.budget.gov.au/2014-15/index.htm Good luck J
The last and easiest: reply to this email or dial 1300 135 918 with your questions. One of my professional team members will be able to answer any questions you have about this new budget – and how it effects you, your family and your business.