The 2013 Federal Budget was the start of the ‘belt-tightening’ with a number of changes to decreasing concessions and in some cases increasing taxation. So what actually got legislated?
Increase to the Medicare Levy (Start Date – 1st July 2014)
In order to assist with the cost of the National Disability Insurance Scheme (NDIS) the 2013 Federal Budget proposed an increase in Medicare Levy from 1.5% to 2% for all taxpayers. The legislation received Royal Assent on the 28th May 2013 and will start on the 1st July 2014.
Ceasing Baby Bonus Payments
The popular Baby Bonus payment of $5,000 per child was scrapped in the 2013 Federal Budget with Baby Bonus payments ceasing on the the 1st March 2014. In lieu an additional payment of Family Tax Benefit A is payable of $2,000 for the first child and $1,000 for subsequent children. Being paid under FTB Part A, eligibility is more restricted and has been restricted further under the 2014/15 Federal Budget.
Introduction of a 15% tax on pension earnings over $100,000
It was proposed in 2013 that account based pension investment earnings over $100,000 would attract an earnings tax of 15%. This measure was set to apply from the 1st July 2014. This would have impacted a wide range of superannuation savers and this measure was scrapped by the Coalition Government and will not come into effect.
Increased Superannuation Contributions Cap
A measure increasing the Superannuation Contributions Cap from $25,000 to $35,000 was passed. As such in the 2013/14 financial year for those aged 59 years or over on 30 June 2013 have access to the increase limit and from the 2014/15 financial year those aged 49 years or over on 30 June 2014 will have access. In addition, indexation has started for the concessions contributions cap for all superannuation savers and the cap will increase to $30,000 from 1st July 2014.
Pensioner Family Home Downsize Pilot
Mentioned in the 2013 Budget was a $112m trial to allow pensioner who have lived in their home for 25 years the abilty to downsize, place at least 80% of the proceeds in a special 10-year account and have those proceeds exempted from Centrelink testing. This trial will not proceed.
Reference: Property Council of Australia
A reduction in the limit of Self Education Expenses limited to $2,000 (currently unlimited) per annum from 1st July 2014 will not go ahead. Individuals will still have no limit to self-education expense deductions.
The phase out of the Net medical expenses tax offset (NMETO) will continue as proposed in the 2013 Federal Budget and passed on the 18th March 2014. Those who currently claimed this benefit in the 2013/14 financial year will be able claim this benefit in the 2014/15 financial year. The tax offset will still apply for disability aids, attendant care or aged care expenses.
Ceasing HELP Upfront Payment Discount
The upfront payment discount for the Higher Education Loan Program (HELP formerly HECS) discount for upfront payments was supposed to be abolished from 1st January 2014. As at 23rd December 2013, legislation had not passed the senate and at this stage, the discount continues.
Reference: Study Assist – Notice to Students
So now that a year has passed – how do you feel the 2013/14 Federal Budget impacted you? Share below with your questions and comments
About the Author – The Money Geek
The Money Geek is the head money blogger for MoneyGeek.com.au. With over 8 years experience in the finance industry, the Money Geek provides information over a range of topics to help families Australia-wide improve their financial literacy to become their own geeks and take control of their financial future!