Many people expected more tough love from the Government to move the budget towards surplus and that was certainly not the case in regards to the small business incentives. However, behind this, the key savings measures target the middle class assuming the budget is approved by the upper house. The key points:
| The key benefactors: |
| Super funds members drawing an income stream continue to enjoy 100% tax exempt status * on super fund assets which support the pension. |
| Small Business Pty Ltd companies (<$2m income) will retain more earnings with a cut in the company tax rate from 30% to 28.5% from 1 July 2015. This will be attractive where a company receives investment income in the form of 30% franking credits on any dividend income. |
| Instant write off on new assets <$20k installed and ready for use from 12 May 15 to June 2017 for small businesses (turn over <$2m) To be eligible need to have a genuine business. Note a simple ABN registration may not be sufficient. |
| Age pensioners with relatively lower levels of assets will gain access to a higher pension. A homeowner couple will gain the full pension from 1 January 2017 with assets of $375,000 (which is up from the current threshold of $286,500). |
| The unfavourable changes: | |||||||||||||||||||||||||
A reduction in the asset limits to qualify for a part age pension from 1 January 2017 as below:Single – Asset cut out threshold
Couple Asset cut out threshold
The age pension will also phase out faster where it will be reduced by $3 per fortnight (currently $1.50 per fortnight) for every $1,000 of assets over the minimum thresholds. |
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* The federal opposition has mooted a new super tax of 15% for member accounts where income exceeds $75k per annum if they win government. This is lower than the $100k threshold mooted by Wayne Swan when Federal Treasurer.