What the Federal Budget means for individuals – Budget Breakdown
You’ve heard a lot about the new federal budget in the last couple of weeks. It’s easy to skim over the paper or give it half your attention when the news is on. We’re making it easy and skipping the parts that won’t apply to most individuals – here are the key points of the latest federal budget that could affect you in our easy to read Budget Breakdown:
Superannuation
A hot topic in the budget this year, super is undergoing numerous changes that you should know about. When you start thinking about retirement, what most of you will do is transfer the money from your super fund into a retirement account, where the money won’t be taxed. Under this budget, the amount you can transfer is capped at $1.6 million. Anything over this will have to stay in your super fund where it will continue to be taxed.
Additionally, you will now only be able to put $25,000 into your super fund each year rather than the previous $35,000, regardless of your age, starting from the 1st of July 2017.
Thirdly, you can now only contribute an extra $500,000 during your working life into your super fund. The amount is backdated from the 1st of July 2007 so any after-tax dollars contributed to your super since this date will be applied to the $500,000 limit.
Australian’s are now working further into their senior years. This is reflected by another change, allowing you to claim the income tax reduction on your super contributions until the age of 75, instead of 64, without having to meet the workers test. For senior Australians, it’ll now be easier to increase retirement savings.
These changes highlight the fact that you need to be smart when it comes to your super. We won’t go into the nitty-gritty, but if you don’t have your head wrapped around the ins and outs of superannuation, find someone who does (like us) and rack their brains.
Tax brackets
The middle-income threshold at which you are taxed at a rate of 32.5% has been widened to be between $37,001 & $87,000. In the scheme of things this will probably have a minimal impact on your bank account, but a saving is still a saving.
Budget Deficit Levy
Do you earn over $180,000? The deficit levy will continue until next year, with an extra 2% to be taxed from your income.
Smokers Tax
It might be time to listen to your doctor… smoking is about to become an exceedingly expensive habit. The Liberals announced they would match Labor’s policy to keep increasing the tobacco excise meaning that by 2020, a packet of cigarettes will cost about $40.
Let’s keep in mind that these changes aren’t set in stone… Turnball might not even win the next election! We’ll pay close attention to its unravelling and keep you up to date. In the meantime, don’t hesitate to contact us with any other questions you may have.
