Baby boomers and pensioners the winners in Federal Budget
Full of pre-election goodies, the coalition government has used its generous baby boomer and pensioner package within the Budget to hit back at what it regards as Labor policies designed to "attack retirees".
Based on the robust assumption that recent revenue boosts will continue, the centrepiece of treasurer Scott Morrison's third Budget are plans to hand out $140 billion in income tax over the next decade.
To help you work out how you will be affected, here's a round-up of the Budget's main features.
The 0.5% increase to the Medicare levy due to start in July 2019 will be scrapped, leaving taxpayers between $125 and $855 better off.
Personal income taxes are now officially capped at 23.9% of GDP. Best guesses suggest the cap will be reached in 2022-23, with any surplus going to further personal income tax cuts. However, in light of lower spending and $21.4 billion of extra revenue since Christmas, the government plans income tax cuts before the 23.9% is reached, with low to middle-income earners being the early beneficiaries.
The personal cuts roll out in three phases over seven years, culminating on July 1, 2024, with the abolition of the 37% bracket. As a result, 94% of taxpayers earning between $41,000 and $200,000 will pay no more than 32.5c in the dollar, up from 63% previously.
In phase one, from July 1 this year, a low and middle-income tax offset in the form of a non-refundable benefit of up to $530 will be available until 2021-22, increasing to $645 in 2022-23. Also from July 1, the $87,000 income threshold over which the 37% rate applies will be increased to $90,000.
Then on July 1, 2022, the $90,000 threshold will jump to $120,000 so that everyone under that amount will pay 32.5c in the dollar. As a result, savings will range from $540 for those earning $60,000 to $2025 for someone on $200,000.
The third phase, which kicks in on July 1, 2024 will abolish the 37% bracket, at which point 32.5% will be applied to all earnings between $41,000 and $200,000.
While people earning $30,000, $80,000 and $160,000 can expect $1400, $3740 and $8415 respectively off their annual tax bill, they'll have to wait until 2024-25 to receive the money.
Craft beer drinkers ... maybe. The removal of tax anomalies on small kegs used by craft brewers could mean cheaper beer.
Included among an extra $24.5 billion added to the $75?billion already earmarked for big-ticket infrastructure projects are:
- Melbourne: $5 billion for a rail-link from Melbourne Airport to the CBD.
- Sydney: $5 billion for rail lines to the new western Sydney airport.
- Perth: $2 billion for Perth's Metronet project.
- Brisbane-Gold Coast: $1 billion to add extra lanes on the M1 connecting the two cities.
While there are no changes to the $6 billion-plus increase in super taxes in the 2016-17 Budget, the rules have been tweaked.
Self-managed funds: The maximum number of members in an SMSF increases from four to six. This may avoid the current arrangement where families, potentially including parents and their children (and possibly their spouses), may need to have multiple SMSFs to accommodate more than four members.
While there's some concern the new rulings could result in the kids out-voting their parents, the change will reduce complexity and cut running costs.
Young super: Fund members under 25 and those with balances less than $6000 will no longer be forced to take out life insurance.
All fund members: From July 1, 2019, there's a ban on exit fees on all super accounts, and a 3% annual cap on passive fees on accounts below $6000.
Retirees: If their total super balance is less than $300,000, they'll be able to contribute for 12 months after retirement without having to satisfy the work test.
High-income earners: Those earning more than $263,157 a year from multiple employers will be allowed to make some wages exempt from the super guarantee.
Pensioners and baby boomers
The aged: 14,000 extra home care packages will ease the existing waiting list of 104,000 retirees.
An additional $1.6?billion will go towards extra home care packages to help the aged stay healthier for longer. Including four levels of support, home care packages allow the elderly to pay for personal care, meal preparation and chores.
Pensioner work bonus: This enables pensioners (plus self-employed individuals) to earn up to $250 a fortnight without affecting their pension, and the earnings cap has just been lifted to $300 a fortnight.
Pension Loans Scheme: This has been extended to everyone over 65, allowing retirees on a full age pension, plus the self-funded, to use the equity in their homes to increase the maximum fortnightly income stream to 150% of the age pension or $1200 a fortnight, to be repaid from their estate. The broader scheme is expected to boost income for a couple by up to $17,800 annually.
Workers and job seekers
Those over 45 will be eligible for training programs to ensure they remain employable.
Patients: There's an extra $1.4 billion over five years from 2017-18 for new PBS listings, including spinal muscular atrophy, which alone receives $241 million for a life-saving medicine, cutting the cost to patients by hundreds of thousands of dollars.
Disability services: Due to the unexpected revenue windfall, the government has committed to making good on its previous NDIS funding commitments. Immunisation: $40 million for national whooping cough immunisation program for pregnancy.
Childcare: $271 million Community Child Care Fund for early childhood education and care. Preschool: $440 million funding boost to preschool education.
No measures that specifically address housing supply and affordability.
Increasing enforcement of the illicit tobacco trade could make cigarettes more expensive for "chop chop" durries.
By 2019-20 the government plans to save $300 million through Centrelink fraud detection and debt recovery.
From July 1, 2018, new migrants will have to wait four years instead of three to access certain welfare benefits.
To crackdown on tax avoidance, there's a new $10,000 limit for cash payments for goods and services from July 1, 2019.
While the 2014 decision to increase the super guarantee from 9.5% to 10% on July 1, 2021, remains intact, the increase to 12% has been delayed from 2021 until 2025.
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