Budget Banners-Wealthpartners

Last night’s Federal Budget contained a number of proposals that may impact your Financial Planning.  We were pleased/relieved to see  the treasurer re-affirm that “there will be no new taxes on superannuation under this Government”.

In summary, the key measures we identified from the budget were:

  • support small business, including tax cuts and increased depreciation allowances.
  • reforms to the age pension assets test and those entering Aged care
  • a families support package with a focus on child care

From our perspective Small business was the key winner.  Small business with less than $2 million in turnover will be eligible for accelerated depreciation on asset purchases less of than $20,000.  Small Business Company tax has been cut to 28.5%.  Sole traders, trusts and partnerships will receive a 5% tax discount on income tax up to $1000.

There have been changes made to the assets test for the Age Pension.  By our calculations Pensioners with less than $451,000 of assessable assets will receive a higher benefit, those over this amount will receive less.  A couple who own their own home with more than $823,000 will lose their Age pension benefits.

The Budget announcement indicates that individuals who lose their pension benefits due to Asset test changes will automatically be issued with a Commonwealth Seniors Health Card or a Health Care Card.  We cannot find any detail in the budget papers so stay tuned for further information on this measure.

New aged care residents who enter aged care from 1 January 2016 will have their rental income from renting out their former home included in the calculation of their means tested amount. This differs from current rules, where residents who pay some or all of their accommodation payments as periodic payments are entitled to an exemption on the rental income from their former home when calculating their means tested amount for aged care fee purposes.

A child care subsidy will replace the child care benefit and child care rebate.  Parents relying on childcare will receive subsidies up to 85% of the child care fees if family income is less than $65,000.  Families earning $170,710 or more will be eligible for a 50% rebate.  Higher income earners >$180,000 will have their subsidy capped at $10,000.

From 1 January 2016, families will no longer be eligible for subsidised child care or the Family Tax Benefit Part A end-of-year supplement (up to $726.35 for each child) unless their child is up-to-date with all childhood immunisations.

There were a number of other initiatives targeting perceived loopholes or overly generous benefits;  Ceasing the “double dipping” on Government funded and employer funded paid parental leave.  Capping The removal of the tax free threshold for temporary work visa holders or “backpackers” tax.  Tightening the eligibility criteria for Zone tax offset for remote workers and tightening repayment obligations for those with HELP debts.

Please remember that these proposals require passage of legislation before they are implemented. As we get further clarity from treasury we will update you.  Further detail on all measures are contained in the attached summary.   If you have any queries, please contact your Financial Planner.

Please CLICK HERE or on image below to view Oliver’s Insights regarding the Budget announcement

Oliver's Insight Budget Image

 

Please click on the image below to view a video summary of key points:

budget video grab

Please contact the office if you have any questions relating to this post.