12
02 May 2016
E
2016 Fedral Budget
What the 2016 Federal
veryone from the young and struggling to the much older and much
more comfortable have been impacted by the 2016 Federal Budget.
This is what it means for you.
If you’re struggling to find your first job...
A new youth employment program called
Young Jobs PaTH — which stands for Prepare, Trial, Hire — aims to help 120,000 vulnerable young people boost their job readiness and enter the workforce.
Starting in April next year, job seekers under the age of 25 will be able to register for
“intensive pre-employment skills training” focusing on skills including working in a team,
presentation and computer literacy.
The government will then work with businesses to introduce an internship program
where the job seeker will work 15 to 25 hours
a w eek for between one and three months.
During the internship the government will
top up the job seeker’s regular income support payment with an extra $200 per fortnight. “This is real work for the dole,” Scott
Morrison said.
If you earn about $80,000 a year...
Half a million workers earning over
$80,000 have been given a tax cut.
The government is increasing the upper
limit for the second highest tax bracket of 37
cents in the dollar from $80,000 to $87,000.
A worker earning over $87,000 will now
be up to $315 better off every year.
Previously, they would have been taxed
at 37 per cent on every dollar earned over
$80,000, whereas now the lower tax rate of
32.5 per cent will apply.
Bracket creep, where the process of inflation pushes people into higher income
brackets without an increase in their spending power, has been described as taxation by
stealth.
Scott Morrison said the government
would “like to do more, but this is what we
can afford today”.
The changes will cost the budget $3.95
billion over the next four years.
If you’re a low-income earner...
You haven’t been forgotten.
The government will forgo $280 million in
revenue over the next four years by raising
the thresholds at which low-income earners
have to start paying the Medicare levy.
For singles, the threshold will be increased
to $21,335. For couples with no children, it
will be increased to $36,001, and for senior
and pensioner couples with no children the
threshold will go up to $46,966.
For couples, the additional amount of
threshold for each dependent child or student will increase to $3306.
The government will also keep a tax
offset that means low income earners will get up to
$500 of the tax they pay on
their super refunded if they
earn less than $37,000.
If you’re a small business
owner...
Small businesses are getting another tax cut — and getting bigger at the same time.
Last year the government
reduced the tax rate from 30
per cent to 28.5 per cent for
businesses with turnover of
less than $2 million.
This year, Scott Morrison has
cut the tax rate further to 27.5
per cent, while at the same time increasing
the scope to businesses with turnover of less
than $10 million.
That means 870,000 businesses employing 3.4 million Australians will have their tax
rate reduced.
Around 60,000 businesses employing 1.5
million fall into the $2 million to $10 million
bracket. They will have their tax rate reduced
by 2.5 per cent after missing out last year.
And remember that instant tax deduction
for business equipment under $20,000 introduced last year?
The government has also extended that
to businesses under $10 million turnover —
but it still expires on 30 June 2017, so get
splashing that cash.
If you’re a big business owner...
But wait, there’s more. Big business will
get access to
the lower tax rate
as well — eventually.
The government will do
this using an
incremental
process, firstly
by gradually
increasing the
size of businesses that
can access
the lower tax
rate of 27.5
per cent, and
finally by reducing the
tax rate for
all business to 25
per cent.
The threshold will increase from $10 million to $25 million in 2017-18, to $50 million
in 2018-19, and $100 million in 2019-20.
That will mean that by 2020, around 4.9
million people — more than half of all employees in the country — will be working at
companies paying the lower tax rate of 27.5
per cent.
The threshold will increase every year until 2023-24, before a final tax cut for all businesses to 25 per cent in 2026-27.
If you’re looking to buy a home…
This Budget doesn’t make it any easier.
Confirming negative gearing would not be removed or limited, and capital gains tax would
not be changed, Mr Morrison made out he
was doing average taxpayers a favour.
“Those earning less than $80,000 a year
in taxable income make up two thirds of
those who use negative gearing,” he said in
his speech.
“We do not consider that taxing these Australians more on their investments, including
increasing their capital gains tax, and undermining the value of their own home and investment is a plan for jobs and growth.”
If you own property…
Mr Morrison doesn’t want to be unfair to
property owners and “undermine the value
of their own home and investment”.
So he’s not
making
any changes to negative gearing
and capital gains tax discounts. Though the
tax concessions are pushing house prices
higher which is bad news for property seekers, the Government doesn’t think that’s reason enough to “increase the tax burden on
Australians who are just trying to invest”.
If you are an older Australian...
The government will get rid of the requirement that someone aged 65 to 74 years old
has to be working to put money into super.
It will also allow someone to put money into
their spouse’s account regardless of whether he/she is working.
If you are a woman...
The government will help you to build up
your super savings if you take time off work
to have children.
You will get up to $500 tax refunded if you
earn less than $37,000, and will be able to
rollover super balances for five years if you
put less than $25,000 a
year into
super.
If you
are a lowincome
earner,
your partner will also
get tax offsets if they
put money
into your super.
If
your
kids are in
school…
It’s not as
much as the
Opposition
is promising,
but the Government has allocated $1.2 billion in additional funding for government and
non-government schools.
The grants will be tied to performance
measures decides by the Federal Government, meaning schools will only get the extra
cash if they live up to their standards. The
conditions attached to the extra funding have
been sold as ensuring “better outcomes for
students and parents”.
If you have a really large super fund...
The government will stop people from
building up multi-million dollar super funds
in an effort to save $550 million. From now
on, the total amount of extra money people
can voluntarily put into their super funds (not
including money they salary-sacrifice) will be
capped at $500,000.
The transition-to-retirement rules will also
change so people who are under the age of
65 can only access $1.6 million tax free before they retire. This cap will apply to everyone, including current retirees.
The government will also stop people from
holding more than $1.6 million in tax-free
super accounts. People will either need to
withdraw the money from their accounts or
transfer it into a separate accumulation account, where the earnings will be taxed at 15
per cent.
To put this into perspective,
the average super balance for a
60-year-old Aussie is $285,000.
If you’re a smoker…
Bad news. The Government
is planning a further four annual
12.5 per cent increases in tobacco excise.
Starting September 1 next
year, the price of cigarettes
will go up every single year for
at least the next four, edging
closer to the $40 pack smokers all fear.
Also from July 1 next year,
smokers will only be allowed
to leave the airport with 25 cigarettes or equivalent, rather than the current
50.
If you have bad teeth…
The Government will establish a $1.7 billion Child and Adult Public Dental Scheme to
ensure that dental spending is prioritised to
those most in need.
All children and adult concession card
holders only will be eligible for the scheme,
which will see the Federal Government provide 40 per cent of the what it decided is the
“national efficient price” of dental work, with
states and territories chipping in the
extra 60 per cent
under national partnership agreement.
To fund the
scheme,
they’re
shifting
around
money from existing dental programs, but say
those are underutilised or inefficient.
If you’ve been
burned by the big
banks...
The corporate
watchdog is getting a funding boost to help combat bad
behaviour in the financial sector, with Australia’s banks to pay for the privilege of their
own regulation.
ASIC will get an extra $121.3 million over
the three years from 2016-17 to increase
surveillance and enforcement in the financial advice, responsible lending and life insurance sectors. Treasury will get an extra
$5.9 million over the same period.
The
cost will initially be offset by an increase in
fees collected by the Australian Prudential
Regulation Authority, with the user-pays industry funding model to commence in the
second half of 2017.
However, the Abbott Government actually cut $120 million from ASIC’s funding
in 2014, with staff numbers down 14.4 per
cent since 2014-14 from 1834 to 1569.
The funding for ASIC includes $39.2 million for technology
upgrades, presumably leaving
the leftover $82.1
million for increased staffing.
If you need to
go to hospital…
The Budget’s
major contribution to hospitals
is making sure
they run better.
An estimated
additional $2.9
billion for public
hospitals over
the next three
years is focusing on improving
patient
safety and the
quality of services and re-