It was a tough choice last night – do I watch Wayne Swan deliver the Federal Budget for 2011/12 or do I watch Masterchef deliver some fancy food.
If you opted for Masterchef, here is a brief summary of some of the main points of the Budget so you can get an idea of whether there are some changes that affect you.
Generally speaking, the Budget was tight, already described as ‘tough as tofu’. Wayne Swan dubbed it the Budget to promote ‘jobs, jobs, jobs’. There is really nothing to get too excited about in this Budget. For example, it’s the first time in 8 years there was not a tax reduction.
In summary, here are the tax and superannuation highlights.
Individuals and families
- The dependent spouse rebate for those aged less than 40 will be phased out with the view it will encourage more Australians into paid employment.
- The amount of the low income tax offset will be increased from 50% to 70% of the entitlement, which is delivered to low and middle income earners through their regular pay.
- The government will limit the ability of minors (children under 18 years of age) to access the low income tax offset to reduce tax payable on their unearned income, such as dividends, interest, rent, royalties and other income from property, with effect from 1 July 2011.
- From 1 July 2011, self-education expenses will no longer be deductible against all government assistance payments.
- From 1 January 2012, the discount available to students electing to pay their HECS student contribution up-front will be reduced from 20% to 10%, and the bonus on voluntary payments to the Tax Office of $500 or more will be reduced from 10% to 5%.
- From 1 July 2011, families in receipt of Family Tax Benefit Part A will be eligible for an advance of up to 7.5%, up to a maximum of $1,000, of their annual Family Tax Benefit Part A entitlement.
- Indexation of the Family Tax Benefit (FTB) Part A and B supplements will be suspended for 3 years. Indexation of family payment higher income thresholds and limits will also be paused at their current level until 1 July 2014 (rather than being CPI-indexed).
- From 1 January 2012, the eligibility for Family Tax Benefit Part A will be limited to children up to the age of 21 years.
- A flat rate of 20% will replace the scale of statutory rates currently used to calculate the taxable value of a car fringe benefit under the “statutory formula” method.
- From the 2010/11 financial income year, the Medicare levy low-income threshold will increase to $31,789 (up from $31,196) for couples, and to $18,839 (up from $18,488) for singles. For families, the additional amount of threshold for each dependent child or student will also be increased to $2,919 (up from $2,865).
- Eligible individuals will have the option of having excess concessional superannuation contributions assessed as income at their marginal rate of tax, rather than incurring excess contributions tax.
- The government will set the higher concessional superannuation contributions cap for eligible individuals aged 50 and over with total superannuation balances of less than $500,000, due to apply from 1 July 2012, to $25,000 above the general concessional cap. Currently the general concessional contribution cap is set at $25,000pa.
- Employees will receive information on their pay slips about the amount of superannuation paid into their accounts.
- The freeze to the indexation of the income threshold for superannuation co-contribution purposes will be extended for an additional year to 2012/13.
This information summary was sourced from the 2011 Federal Budget.
If you are looking for further detail, you can see the full 2011 Federal Budget at http://budget.gov.au/past_budgets.htm