Federal Treasurer Joe Hockey has handed down his first Budget which confirms a range of recently announced changes to income tax, health care, family payments and social security.
Key announcements
This means that individuals with taxable income of:
Federal excise was frozen at 38.14 cents a litre in 2001 when the Coalition government at the time cut fuel excise by 1.5 cents and then froze it in perpetuity at the 38 cent rate.
Family tax benefit amendmentsFamilies may feel the pinch with a raft of changes to family tax benefit payments to apply from 1 July 2015:
For patients with concession cards and children under 16 years of age, the MBS rebate will only be reduced for the first 10 services in each year, after which it will return to current benefit levels. A new Low Gap Incentive will replace bulk billing incentives for providers of these services.
The Low Gap Incentive will be paid to providers where they provide services to patients with concession cards or children under 16 years of age and only charge the $7 patient contribution (in the case of the first 10 services in a year), or where they charge no patient contribution (for additional services in that year).
Paid parental leaveFrom 1 July 2015 the Government will introduce a Paid Parental Leave scheme payable for 26 weeks with an income cap of $100,000 per year, which will include superannuation.
Superannuation guarantee changesThe Government will change the schedule for increasing the superannuation guarantee rate to 12%.
The SG rate will increase from 9.25% to 9.5% from 1 July 2014. Then the rate will remain at 9.5% until 30 June 2018 and then increase by 0.5% each year until it reaches 12% in 2022-23.
Higher Education Loan Program changesFrom 1 July 2016 the income threshold at which students commence repayment of their Higher Education Loan Programme (HELP) debts will be reduced.
The new minimum repayment threshold will be set at 90% of the minimum threshold that would otherwise have applied in 2016/17. Treasury estimates the new minimum threshold to be $50,638 in 2016/17.
A new repayment rate of 2% of repayment income will be applied to debtors with incomes above the new minimum threshold. Also there will be no other change to current repayment rates.
Currently the minimum repayment threshold for the 2013/14 income year is set at $51,309 and the minimum repayment rate is 4%.
The interest rate applied to HELP loans will be changed to a rate that reflects the cost of Government borrowings, with a maximum rate of 6%.
Pension age to increase to 70 from 2035From 1 July 2025, the Age Pension qualifying age will continue to rise by six months every two years, from the qualifying age of 67 years that will apply by that time, to gradually reach a qualifying age of 70 years by 1 July 2035.
People born before 1 July 1958 will not be affected by this measure.
It is important note that these announcements need to be passed by Federal Parliament before they become law.
Key announcements
- Introduction of a temporary budget repair levy
- Fuel excise indexation reintroduced
- Family tax benefit payment reforms
- Changes to the Medicare system
- Paid parental leave changes
- Superannuation guarantee rate to increase to 9.5% from 1 July 2014
- Changes to HELP repayment thresholds, indexation and loan fees
- Pension age to increase to 70 from 2035
This means that individuals with taxable income of:
- $180,000 or below will not pay the levy
- $200,000 will pay 2% of $20,000 or $400 in levy; and
- $300,000 will pay 2% of $120,000 or $2,400 in levy.
Federal excise was frozen at 38.14 cents a litre in 2001 when the Coalition government at the time cut fuel excise by 1.5 cents and then froze it in perpetuity at the 38 cent rate.
Family tax benefit amendmentsFamilies may feel the pinch with a raft of changes to family tax benefit payments to apply from 1 July 2015:
- Family Tax Benefit (FTB) Part B primary earner income limit will be reduced from the current $150,000 pa to $100,000 pa.
- FTB Part B payments will be limited to families whose youngest child is younger than six years of age. A transitional arrangement will ensure families with a youngest child aged six and over on 30 June 2015 remain eligible for the payments for two years.
- A new allowance of $750 per child aged between six and 12 years will be introduced for single parents on the maximum rate of FTB Part A whose youngest child is between six and 12 years of age from the point when they become ineligible for the FTB Part B.
- The FTB Part A Large Family Supplement which is currently $313.90 per child per year will be limited to families with four or more children and will be paid in respect of the fourth and each subsequent child in the family.
For patients with concession cards and children under 16 years of age, the MBS rebate will only be reduced for the first 10 services in each year, after which it will return to current benefit levels. A new Low Gap Incentive will replace bulk billing incentives for providers of these services.
The Low Gap Incentive will be paid to providers where they provide services to patients with concession cards or children under 16 years of age and only charge the $7 patient contribution (in the case of the first 10 services in a year), or where they charge no patient contribution (for additional services in that year).
Paid parental leaveFrom 1 July 2015 the Government will introduce a Paid Parental Leave scheme payable for 26 weeks with an income cap of $100,000 per year, which will include superannuation.
Superannuation guarantee changesThe Government will change the schedule for increasing the superannuation guarantee rate to 12%.
The SG rate will increase from 9.25% to 9.5% from 1 July 2014. Then the rate will remain at 9.5% until 30 June 2018 and then increase by 0.5% each year until it reaches 12% in 2022-23.
Higher Education Loan Program changesFrom 1 July 2016 the income threshold at which students commence repayment of their Higher Education Loan Programme (HELP) debts will be reduced.
The new minimum repayment threshold will be set at 90% of the minimum threshold that would otherwise have applied in 2016/17. Treasury estimates the new minimum threshold to be $50,638 in 2016/17.
A new repayment rate of 2% of repayment income will be applied to debtors with incomes above the new minimum threshold. Also there will be no other change to current repayment rates.
Currently the minimum repayment threshold for the 2013/14 income year is set at $51,309 and the minimum repayment rate is 4%.
The interest rate applied to HELP loans will be changed to a rate that reflects the cost of Government borrowings, with a maximum rate of 6%.
Pension age to increase to 70 from 2035From 1 July 2025, the Age Pension qualifying age will continue to rise by six months every two years, from the qualifying age of 67 years that will apply by that time, to gradually reach a qualifying age of 70 years by 1 July 2035.
People born before 1 July 1958 will not be affected by this measure.
It is important note that these announcements need to be passed by Federal Parliament before they become law.
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