2014/15 Federal Budget UpdateWhat does it mean for you?

May 2014

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A Transitional Budget

Young Aussies

Families with kids

Higher income earners

Pre-retirees

RetireesEmployer

s

Jobseeker reforms Paid parental leave Incentives to save for super still intact, if you can afford it:- Contribution caps still indexed

- Penalties for contribution breaches reformed

Retirement savings focus

Health care contribution

Deregulation of tertiary education

Changes to HELP payback: sooner, and at a higher rate (max 6%)

Financial support for TAFE students

Changes to social security benefits

Loss of the tax offset for dependent

spouses 2% temporary tax on income >$180k

for 3 years

‘Restart’ program for older workers

Pensions indexed to lower rate of inflation, not wages

Super income stream will now count towards your Seniors Health Care Card

eligibility

1.5% tax cut for most

businesses

Delayed SG payment dates and

rates

Jobseeker reformsJobseekers younger than 30 will wait 6 months before receiving Newstart or Youth Allowance

Deregulation of tertiary educationTertiary fees might increase (or decrease?)

Changes to HELP repaymentsPayback now starts at $50,638k income, and the interest is likely to increase, but capped at 6%

Financial support for TAFE studentsStudents of Diplomas, Advanced Diplomas and Associate Degree courses will now be eligible for direct financial support

First home saver accounts abolished

Young Australians

Paid parental leave (PPL) From 1 July 2015, an income cap of $100,000 per annum, including super replaces the existing means test. May be extended to 26 weeks instead of 18 weeks

Changes to social security benefits

Family Tax Benefit A end-of-year supplement reduced to $600 from $726.35

Family Tax Benefit B end-of-year supplement reduced to $300 from $354.05

Eligibility threshold for Family Tax Benefit B reduced to $100k from $150k from 1 July 2015

When your youngest child turns six, you will no longer be eligible for Family Tax Benefit B however transitional arrangements apply

Families with kids

Removal of dependent spouse tax offset

Benefit loss of approximately $2,400 from July 2014

Some relief for singles

Low income single parents will get an extra $750 per year for children aged between six and 12 years.

Don’t forget…

Kids under 16 are exempt from the $7 health payment after their first 10 visits

Families with kids

Temporary budget repair levy

Any income you earn over $180,000, may be subject to 2% extra tax for the next 3 years.

Higher income earners

Taxable income Levy payable (pa)

$180,000 $0

$200,000 $400

$220,000 $800

$240,000 $1,200

$260,000 $1,600

$280,000 $2,000

$300,000 $2,400

No changes to super contribution caps No change to contributions caps… and they’re still indexed

Relief if you breach the non-concessional contributions cap

“Restart” program for older workers

$10,000 over two years to employers who hire a previously unemployed 50+ worker

Pro rata available for part time employment

But on the other handMature Aged Workers Tax Offset is abolished from 1 July 2014 for ALL

taxpayers. Still to comeNews about super preservation age

Pre-retirees

Pensions indexed to a lower rate

Pension payments are now indexed to inflation, not wage growth

Deeming thresholds reduced

Reduced pension entitlements likely under the income test from 1 July 2017

Commonwealth seniors health card (CSHC) eligibility tightened

Your tax-free super income stream will now count towards your CSHC eligibility

Seniors supplement for CSHC holders, gone

Annual payments of $876.20 (singles) and $1,320.80 for couples scrapped from 20th September 2014.

Retirees

Company tax cuts800,000 businesses will get a 1.5% cut to the Company Tax Rate

Top 3,000 still on the hookThe top 3,000 will still pay a levy to help fund the paid parental leave scheme

Super Guarantee increases delayed

Remaining at 9.5% until 2018

And of course…Repeal of the minerals resource rent tax and the carbon tax

Employers

Aged Pension age increaseAged Pension age increased to 70 by 1 July 2035

No impact if you were born before 1 July 1958

Super won’t grow quite as fast

SG payments increases delayed.

Rate increasing to 9.5% on 1 July 2014 and remaining at 9.5% until 2018

For Everyone

Social security thresholds frozen against indexationSocial security thresholds will not increase for 3 years

Austerity measures

We’ll all have to make choices about how we spend our household budget (health, fuel, university fees)

For Everyone

Some pressing questions

How will you bridge the gap between your retirement and Aged Pension age?

How will you make up for the compound effect of the delay in increase in Super Guarantee payments?

Will there be indirect impacts on you because of changes impacting a family member?

What lifestyle changes would you be willing to make because of cuts to social security benefits?

What are the ‘non-negotiables’ in your family budget?

Are your current financial strategies still relevant?

For Everyone

Disclaimer This information is issued by <insert dealer group or adviser name> and is a summary of <insert dealer group or adviser name> understanding of the proposed Federal Budget 2014/15 changes announced on 13 May 2014.

The changes are subject to the passing of legislation and, accordingly, may not become law or may change. Please note that the information is based on <insert dealer group or adviser name> interpretation of the proposed changes as at the date of issue of this document. Accordingly, you must not do or refrain from doing anything in reliance on this information without obtaining suitable professional advice.

This document may not be reproduced, distributed or published by any recipient for any purpose. It has been prepared without taking into account the objectives, financial situation or needs of any person.

Whilst every effort has been taken to ensure the information used is accurate and reliable, no warranty is given as to the accuracy of the information and no liability is accepted for your reliance on the information.

Statements made during the presentation do not and are not intended to represent financial advice or a recommendation to hold, acquire or dispose of any investment.

Before acting on this information you should consider whether the information is appropriate having regard to your personal needs, financial circumstances and objectives. Investors should always read the Product Disclosure Statement for the relevant product and seek financial and tax advice before making an investment decision.

Any investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. Before making any investment decision you need to consider whether there are any adverse consequences for you, including exit fees, other loss of benefits or increase in investment risks.

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