2012 Federal Budget

At 7:30pm tonight, Wayne Swan delivered his 5th budget with a forecast budget surplus of $1.5 Billion for 2012-13 and $2 Billion for 2013-14. The budget deficit for 2011-12 is $44 Billion compared to the previously forecast $22 Billion deficit. The main objectives of this budget are “to share the tremendous benefits of the mining boom with all Australians” and “to go into bat for working families.”

Key Forecasts

3.25% GDP growth is expected for 2012/2013
3% GDP growth is forecast for 2013/2014
3.75% GDP growth is forecast for 2012/2013
5.5% unemployment is expected for 2012/2013 and 2013/2014

Key Changes for Individuals and Families

The key changes announced in the budget that impact on individuals and families are:

From 1 July 2013, the Family Tax Benefit Part A payment will be increased by $300 per year for families with 1 child and $600 per year for families with 2 or more children, who are on the maximum FTB A rate. Families on the base rate will get an extra $100 for 1 child and $200 for 2 or more children.
In March 2013, a supplementary allowance will be given to recipients of eligible support payments. This will be $210 for singles and $350 for couples.
From 1 July 2012, the tax free threshold for individuals will increase from $6,000 to $18,200 and the low income tax offset will reduce to $445. The threshold will increase further from 1 July 2015 to $19,400 and the low income tax offset will reduce to $300.
As a result of the large increase to the tax free threshold, the standard tax deduction for work related expenses, announced in the previous budget, will no longer go ahead.
The Education Tax Rebate will be replaced with an automatic School Kids Bonus payment for eligible families of $410 per primary school child and $820 per secondary school child.
From 1 July 2012, a means test will be introduced for the net medical expense tax offset. For couples earning more than $168,000 and singles earning more than $84,000, the threshold will be increased from $2,000 to $5,000 and the benefit will be reduced from 20% to 10%.

Key Changes for Businesses

The key changes announced in the budget that impact on businesses are:

From 1 July 2012 eligible businesses will be able to carry back tax losses of up to $1m and offset profits from the previous year. From 1 July 2013, losses will be able to be carried back to up to 2 previous years.
From 1 July 2012, small businesses can write off in 1 year assets costing up to $6,500 and the first $5,000 of a motor vehicle.
The previously promised company tax rate reduction to 29%, announced under the mining tax package, has been scrapped.
The changes to the Living Away From Home Allowance will be further tightened by limiting the benefits to a 12 month period. This will apply from 1 July 2014 for existing LAFHA arrangements and from 1 July 2012 for new arrangements that commence on or after today.

Key Changes for Superannuation

The key changes announced in the budget in relation to superannuation are:

Superannuation Guarantee Contributions will be increased from 9% to 12% from 1 July 2013 to 2019.
The maximum age limit for superannuation contributions will be abolished to support workers over 70 years old to remain in the workforce.
Workers earning under $37,000 will pay no tax on their superannuation contributions from 1 July 2012.
Individuals earning more than $300,000 will pay 30% tax on superannuation contributions compared to the current 15%.
In the previous budget it was annouced that the concessional contributions cap for people aged over 50 would remain at $50,000 for people with superannuation balances under $500,000. This has now been deferred to 1 July 2014 so for the next 2 financial years everyone will have a maximum concessional contribution cap of $25,000.