Well, we have now been delivered the first Federal Labor Budget in 13 years, with promises to assist working families, boost infrastructure spending and increase investment in education and healthcare. For quick reference, here is a snapshot of the outcomes from relevant Budget announcements that may affect you:
Superannuation |
Co-contributions and salary sacrifice |
The definition of income that is used to determine eligibility for the government co-contribution is set to include certain ‘salary sacrificed’ contributions to superannuation as at 1 July 2009 |
Tax free lump sums for persons with terminal medical condition |
The commencement of the previously announced measures to allow tax free superannuation lump sum access for people suffering a terminal medical condition, have been back dated to 1 July 2007 |
Taxation |
Income tax scales |
From 1 July 2008, the 30% threshold will increase to $34,001, the 40% threshold will increase to $80,001 and the 45% threshold will increase to $180,001. |
Medicare levy – low income thresholds |
The Medicare levy low-income thresholds increased to $17,309 for individuals and $29,207 for individuals who are in families. Takes effect 1 July 2008 |
Medicare levy surcharge (MLS) |
Threshold for singles increased from $50,000 to $100,000 and those who are members of a family from $100,000 to $150,000, with effect from 1 July 2008 |
Low income tax offset |
Will increase from $750 to $1,200 as at 1 July 2008. It will reduce once income exceeds $30,000 and cut out at $60,000 |
Senior Australians tax offset (SATO) |
From 1 July 2008, the income levels will be increased to $28,867 for singles and $24,680 each for couples. These are the amounts eligible senior Australians do not pay tax on. |
Family Benefits |
Baby Bonus |
Will increase to $5,000 from 1 July 2008 and will be means tested from 1 January 2009. Family income must not be more than $150,000 per year (assessed as not more than $75,000 in the six months after the birth of a child). |
Family Tax Benefit – Part B |
An additional income test will apply from 1 July 2008 so that it will only be available to families in which the principal earner has an annual income up to and including $150,000 per annum. |
Child care tax offset |
From 1 July 2008 the offset will be increased to 50% and the cap on the amount that can be paid will increase to $7,500 per child and will be paid quarterly |
Education tax refund |
Parents who receive Family Tax Benefit A and have children undertaking either primary or secondary school studies or whose children receive Youth Allowance (or related payment) will be able to claim a 50% refund every year on eligible educational expenses. Limits apply. |
Other |
First home saver accounts (FHSAs) |
The first $5,000 of individual contributions to FHSAs each will attract a flat Government contribution of 17%. Earnings will be taxed at 15% and withdrawals will be tax free if used to purchase or build a first home in which to live. Other conditions may apply. FHSAs will commence from 1 October 2008. |
There were various other announcements, but these are probably the more relevant. Please note, other conditions may apply to all the stated changes and this snapshot is a guide only.
