At 7:30pm tonight, Wayne Swan delivered his 2nd budget with a forecast budget deficit of $57.6 Billion for 2009-10. The objective of this budget is to support jobs today by investing in the infrastructure Australia needs tomorrow. Unemployment is expected to reach 8.5% and the economy is expected to contract by 0.5% in 2009-10.

Some of the changes announced include extension of the first home owner’s grant, an increase and extension to the small business investment allowance, changes to the private health insurance rebate and medicare levy surcharge, changes to superannuation, and implementation of a paid parental leave scheme.

We summarise these changes and benefits below.

First Home Owner’s Grant

The federal government’s first home owner’s grant will be extended for a further 6 months until 31 December 2009. The current federal grant of $7,000 for existing homes and $14,000 for new homes will remain until 30 Sep. From 1 Oct to 31 Dec, the federal grant will be reduced to $3,500 for existing homes and $7,000 for new homes.

Small Business Investment Allowance

The small business investment allowance will be increased and extended for businesses with a turnover below $2m per year. The current one off tax deduction of 30% for business assets purchased since Dec 2008 will increase to 50%. This benefit will also be extended until 31 December 2009 instead of 30 June 2009.

Private Heath Insurance Rebate and Medicare Levy Surcharge

From 1 July 2010 the current 30% private health insurance rebate will reduce for higher income earners. In addition to this, the medicare levy surcharge will increase for higher income earners who don’t have private health insurance.

The changes are as follows:

 

		Singles: $75k Couples: $150k		Singles: $90k Couples: $180k		Singles: $120k Couples: $240k
Minimum Rebate		20%		10%		0%
65 – 70 year olds		25%		15%		0%
Older than 70		30%		20%		0%
Medicare Levy Surcharge		1%		1.25%		1.5%

 

Superannuation Changes

From 1 July 2009 the concessional superannuation contribution limits will be halved. People under 50 years old will have a limit of $25,000, and people 50 years old and above will have a limit of $50,000.

In addition to the above, the superannuation co-contribution will be temporarily reduced to a matching of 100% of contributions up to $1,000. This is a 50% reduction from the current 150% matching. This temporary reduction will continue until 30 June 2012.

Paid Parental Leave

From 1 January 2011 the government will introduce a paid parental leave scheme for people with an income of less than $150,000 in the previous financial year and who were in paid work for at least 10 out of the 13 months prior to the birth of a child.

These eligible people will receive a taxable payment equal to the federal minimum wage for 18 weeks – the federal minimum wage is currently $544 per week.