The long awaited Federal Budget has finally been revealed! We’ve had many clients’ ask us what’s in store for them, so we’ve decided to come up with a snapshot of the measures that are set to take place.
Temporary Budget Repair Levy
Probably one of the most widely spoken about topics in relation to the budget was the new “budget repair levy” that the government will be imposing on high income earners.
From 1 July 2014 until 30 June 2017, individuals with a taxable income of $180,000 and above will be obligated to pay a 2 percent levy. This means that for an individual with a wage of $250,000 in the 2015 financial year, they will pay an additional levy of $1,400.
Individual Tax Rates
|Current rates for 2014/2015 financial year*||Proposed rates for 2014/2015 financial year inc. levy*|
|Resident thresholds $||Marginal rate (%)||Resident thresholds $||Marginal rate (%)|
|Up to 18,200||0||Up to 18,200||0|
|18,201 to 37,000||19.0||18,201 to 37,000||19.0|
|37,001 to 80,000||32.5||37,001 to 80,000||32.5|
|80,001 to 180,000||37.0||80,001 to 180,000||37.0|
|180,001 +||45.0||180,001 +||47.0|
*Excluding Medicare levy (2 percent in 2014/2015 financial year)
Fringe Benefits Tax (FBT)
Along with the imposed Temporary Budget Repair Levy, there will also be an increase in the FBT rate to 49 percent. This increase is due to take effect from 1 April 2015.
Employers should also note that in additional to the increase in the FBT rate, there is a consequential adjustment to the FBT gross up rates of 2.1463 where an employer is entitled to an input tax credit and 1.9608 where an employer is not entitled to a credit.
The Budget also saw changes to the means testing of Family Tax Benefit Part B as follows:
The youngest child must be aged less than 6 years in order to receive the payment; and the primary income threshold will be reduced from $150,000 to $100,000 per year.
- Individuals will have the opportunity to withdraw excess non-concessional superannuation contributions rather than pay additional tax for contributions made form 1 July 2013
- The superannuation guarantee rate will increase to 9.5 percent effective 1 July 2014. Click here for more info
- The Mature Age Workers Tax Offset will be abolished from 1 July 2014-05-16 The Dependent Spouse Tax Offset will be removed from 1 July 2014
- Changes to the Higher Education Loan Program repayment scheme