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Integrity, Innovation & Commitment

Federal Budget Changes 2014

  • Thursday, 01 January 2015 06:33

BUDGET DEFICIT LEVY (TAX) OF 2% FOR INCOMES OVER $180,000

The Government announced the introduction of a Budget deficit levy (tax), to apply for 3 years commencing on 1 July 2014. The temporary levy will apply at 2% to every dollar earned above $180,000. For example individuals with a taxable income of $200,000 will pay 2% of $20,000 (levy of $400) and those with a taxable income of $300,000 will pay 2% of $120,000 ($2,400 of levy).

FBT RATE INCREASE FROM 47% TO 49% percentage

To prevent high income earners from utilising fringe benefits to avoid the Budget deficit levy, the FBT rate will be increased from 47% to 49% from 1 April 2015 until 31 March 2017 to align with the FBT income year. The cash value of benefits received by employees of public benevolent institutions and health promotion charities, public and not-for-profit hospitals, public ambulance services and certain other tax-exempt entities will be protected by increasing the annual FBT caps. In addition, the fringe benefits rebate rate will be aligned with the FBT rate from 1 April 2015.

MEDICARE LEVY INCREASE TO 2%

The Medicare levy will increase from 1.5% to 2% from 1 July 2014. That was announced in last year's Budget and has been legislated. The intention of the increase is to help fund the proposed National Disability Insurance Scheme (NDIS), now renamed DisabilityCare Australia. This would mean that, coupled with the proposed new budget deficit levy, the effective top marginal tax rate would become 49% from that date.

Medicare levy surcharge and private health insurance offset thresholds to be frozen. The income thresholds for the private health insurance offset and the Medicare levy surcharge will be frozen for 3 years from 1 July 2015.

FAMILY TAX BENEFIT CHANGES

The Government will maintain current Family Tax Benefit (FTB) payment rates for 2 years from 1 July 2014. Under this measure, indexation of the maximum and base rates of FTB Part A, and the rate of FTB Part B will be paused until 1 July 2016. super payments

The Government will reduce the Family Tax Benefit Part B (FTB-B) primary earner income limit from $150,000 per annum to $100,000 per annum, from 1 July 2015. The income threshold for the Dependent (Invalid and Carer) Tax Offset will also be reduced to $100,000 as it is linked to the FTB primary income earner limit. The Government will limit Family Tax Benefit Part B (FTB-B) to families whose youngest child is younger than 6 years of age from 1 July 2015. As a transitional arrangement, families with a youngest child aged 6 and over on 30 June 2015 will remain eligible for FTB-B for 2 years.

The Government will provide over 4 years a new allowance for single parents on the maximum rate of Family Tax Benefit (FTB) Part A whose youngest child is aged between 6 and 12 years old from the point when they become ineligible for FTB Part B. This allowance will provide $750 for each child aged between 6 and 12 years old in an eligible family from 1 July 2015.

PAID PARENTAL LEAVE SCHEME

The Government confirmed it would proceed with its Paid Parental Leave scheme from 1 July 2015. It will provide 6 months paid leave and will include superannuation.

 

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