As a pre-election budget, we got pretty much what we expected and no major surprises – although significant changes to superannuation rules will hurt the most wealthy Australians, and create new opportunites for others.
To be honest, most Aussies will be more excited about the 0.25% cut in official interest rates announced yesterday by the RBA, than the $6 a week tax cut for those earning over $80,000.
As usual, the devil is in the detail – we’ve prepared a summary of the key points below, but we will follow up with more detailed analysis of the opportunities and threats in the weeks to come.
Note: These changes are proposals only and may or may not be made law.
- The introduction of a superannuation reform package consisting of ten measures, including changes to contribution caps, the introduction of a balance transfer cap and measures that impact transition to retirement pensions.
- Personal tax cuts. The upper limit of the middle income tax bracket (32.5% tax rate) will be raised from $80,000 to $87,000 from 1 July 2016 to help combat bracket creep.
- Low income earners will continue to be exempt from paying the Medicare levy with the low income threshold being increased to $21,335 from 2015-16 income year.
- Tax cuts for small businesses – and simplified GST reporting requirements.
- A tax avoidance taskforce will be established targeting high income earners, multinationals and large organisations.
- A major government contribution will be made to public hospital services.
- A youth employment package – including a work for the dole program for under 25’s.
- New funding over three years to continue tackling family and domestic violence
- Ongoing increases in tobacco excise.
What’s not changed
- No changes to negative gearing.
- No changes to age pension eligibility or payment rates. Some important changes to the aged pension assets test have, however, already been legislated – taking effect on 1 January 2017.
Download the full analysis
If you’d like to discuss any of these points, please contact either Sam or Victoria.