Now that the dust has settled on the budget, here is a quick summary of what may (or may not!) become law.

 
Summary
  • The Medicare levy will increase by 0.5% to 2% pa from 1 July 2014.
  • The $5,000 Baby Bonus will be removed from 1 March 2014. Instead, families eligible for Family Tax Benefit (Part A) will receive $2,000 following the birth of their first child, and $1,000 for each subsequent child.
  • The superannuation concessional contribution cap will increase from $25,000 pa to $35,000 pa from:
    -  1 July 2013 for people 60 and over, and
    -  1 July 2014 for people 50 and over.
  • From 1 July 2014, all pension asset earnings above $100,000 will be taxed at 15%.
 
Baby Bonus
When?  1 March 2014
The Baby Bonus, which currently pays $5,000 to eligible parents for each new born or newly adopted child, will be replaced from 1 March 2014.
Instead, families who are eligible for the Family Tax Benefit Part A will receive $2,000 following the birth of their first child, and $1,000 for each subsequent child. This benefit will be paid as part of their usual Family Tax Benefit Part A payment, instead of a cash bonus payment.
 
Medicare Levy increase
When? 1 July 2014
The Medicare levy will increase by 0.5% to 2% pa of taxable income. This will help raise funds to fund the National Disability Insurance Scheme.
 
Self-education Expenses
When? 1 July 2014
Tax deductions for self-education expenses will be capped at $2,000 pa for individuals.
 
HECS-HELP repayments removed
When? 1 July 2014
Up-front and voluntary early repayments under the HELP program will be removed in 2014. University and other eligible students will no longer receive a discount if they pay fees up-front or repay their HELP debt early.

 

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The key superannuation measures include:

Higher concessional contribution cap
The concessional contribution (CC) cap will increase to $35,000 pa from:
 
  • 1 July 2013 for people 60 and over, and
     
  • 1 July 2014 for people 50 and over.
     
The cap will remain at $25,000 pa for all other ages.
 
The table below outlines the proposed caps that will be available over the coming years.
 

Age

2012/13

2013/14

2014/15

Under 50

$25,000

$25,000

$30,000

50 – 59

$25,000

$25,000

$35,000

60 and over

$25,000

$35,000

$35,000

 Excess contributions tax reforms

 
From 1 July 2013, individuals will be allowed to withdraw any excess concessional contributions made from their super fund.
In these instances, excess concessional contributions will be taxed at the individual's marginal tax rate, plus an amount for interest.
 
High income earners – reduced tax concessions
When? 1 July 2012

In the 2012 Federal Budget, the Government announced that individuals with incomes above $300,000 pa will pay an additional 15% tax on their concessional super contributions. Draft legislation for this measure was recently released and was confirmed in the 2013 Budget.

 

Pension
When? 1 July 2014

 On 5 April 2013, the Government announced changes to the taxation of earnings in super pensions. These proposed changes have been confirmed and the following is due to apply from 1 July 2014:

  • all earnings on assets that support superannuation income streams will only be tax-free up to the first $100,000 per member, and
  • earnings above $100,000 will be treated as income and taxed at 15%.
 
Social Security changes
When? 20 March 2014
The income free area for certain allowance recipients will increase from $62 per fortnight to $100 per fortnight. This means, from 20 March 2014, an individual can earn up to $100 per fortnight before their maximum allowance is reduced.
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