Budget Outcomes For Individuals
The main areas of impact from the 2013 Federal Budget include personal taxation, superannuation and social security.
At this stage these items are proposals only and may or may not be made law, but here’s a summary:
- The Medicare levy will increase by 0.5% to 2% pa from 1 July 2014 to help fund a better life for Australians with significant and permanent disabilities.
- The changes to the personal income tax thresholds, marginal tax rates and low income tax offset that were to take effect from 1 July 2015 have been abolished.
- The tax offset that is available if ‘Net Medical Expenses’ exceed $2,120 (in 2012/13) will be progressively phased out. The impact will be immediate for many people and it will be abolished by 2019.
- The amount of self-funded education expenses that can be claimed as a tax deduction will be capped at $2,000 pa from 1 July 2014.
- The Baby Bonus will be abolished from 1 March 2014.
- Families who are eligible for Family Tax Benefit Part A (FTB (A)) will receive an extra $2,000 following the birth of their first child and $1,000 for subsequent children.
- The income thresholds that are used to determine eligibility for FTB (A) and the threshold of $7,500 pa that applies to Child Care Rebate will not be increased until 1 July 2017.
- Currently, pre-tax and other concessional super contributions are capped at $25,000 pa, regardless of your age.
This cap will increase to $35,000 pa from:
- 1 July 2013 for people aged 60 and over, and
- 1 July 2014 for people aged 50 and over.
- Currently, all earnings from assets held in a super pension are tax-free. From 1 July 2014, only the first $100,000 in earnings per member will be tax-free and earnings above this threshold will be taxed at 15%.
- From 1 July 2012, the tax concession on concessional super contributions will reduce from 30% to 15% for people who earn $300,000 pa or over.
- Currently, income payments received from an account-based pension are concessionally treated under the social security income test. However, from 1 January 2015, account-based pensions will be treated the same as other financial assets and be deemed to earn a particular rate of interest, regardless of the income actually earned.
- An incentive will be provided to older Australians to downsize the home by providing and exemption from the assets test for up to $200,000, subject to certain conditions. The main one is the home must have been owned for at least 25 years.
This information has been prepared by MLC Limited (ABN 90 000 000 402, AFSL number 230694). A company within the National Australia Group, 105 – 153 Miller Street, North Sydney 2060. MLC is not a registered tax agent. If you wish to rely on this to determine your tax obligations you should speak to a registered tax agent. For our general advice disclaimer, check out Advice warning.