At 7:30pm tonight, Joe Hockey delivered his 1st budget with a forecast budget deficit of $29.8 Billion for 2014-15, $17.1 Billion for 2015-16, $10.6 Billion for 2016-17, $2.8 Billion for 2017-18, and a return to surplus in 2018-19.
The main objective of this budget is “to help build a prosperous nation”. The treasurer announced that “it is time for all of us to contribute” and that “the time to fix the budget and strengthen the economy is now.”
Key Forecasts
- 2.5% GDP growth is expected for 2014-15
- 3% GDP growth is forecast for 2015-16
- 6.25% unemployment is expected for 2014-15 and 2015-16, and 6% for 2016-17
Key Changes for Individuals and Families
The key changes announced in the budget that impact on individuals and families are:
- A 3 year budget repair levy (deficit tax) will apply from 1 July 2014 until 30 June 2017. This 2% tax will apply to Individuals with taxable incomes in excess of $180,000
- The dependant spouse tax offset will be abolished from 1 July 2014
- The mature age worker tax offset will be abolished from 1 July 2014
- The school kids bonus will be abolished
- The first home saver accounts scheme will be abolished and the concessions won’t apply to new accounts as of budget night
- From 1 July 2015, all Australians will pay at least $7 for GP visits, blood tests, and X-rays, and general patients will pay $5 more for prescription medication
- The annual family income threshold for accessing Family Tax Benefit Part B will be reduced from $150,000 to $100,000. FTB B will cease when a child turns 6 years old
- All current family assistance payments will be frozen for 2 years
Key Changes for Businesses
The key changes announced in the budget that impacts on businesses are:
- From 1 April 2015 until 31 March 2017, the Fringe Benefits Tax rate will increase from 47% to 49% to prevent high income earners from using fringe benefits to avoid the budget repair levy
- From 1 July 2014, a payment of up to $10,000 will be given to employers who hire a worker aged 50 or more who has been unemployed for at least six months
- The increase in the superannuation guarantee rate will be pushed back by freezing the 9.5% rate from 1 July 2014 until 30 June 2018
- The company income tax rate will reduce to 28.5% from 1 July 2015
Key Changes for Superannuation
The key changes announced in the budget in relation to superannuation are:
- All excess non-concessional contributions and associated earnings can be withdrawn from superannuation funds from 1 July 2013 instead of an excess contributions tax applying
- From 1 July 2014, the cap on non-concessional contributions will increase from $150,000 to $180,000 per year or $450,000 to $540,000 over a 3 year period
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