Last night Treasurer Joe Hockey delivered his Federal Budget speech. As usual we were watching closely, reading the papers and the commentary on Twitter. As expected the budget was one of the toughest seen in the last 2 decades for Australians, with the focus on bringing the budget deficit down.

From a taxation perspective the budget was again very light on. For Small Businesses there are only a handful of changes and according to some analysts Businesses are the winners in this years budget. A nice summary from CBA here. As usual there is a lot of hype and misinformation on the impacts of some of the changes, so let's take a look.

So what are you going to be required to pay:

  1. If you earn more than $180,000 (personal taxable income) you will be required to pay an additional 2%. The additional 2% is only on income over $180,000. So if you earn $200,000 you will be paying an extra $400
  2. Super Guarantee will increase from 9.25 to 9.5% on the 1st July. If you employ someone who earns $80,000 a year you will be required to pay an extra $200 per year in Superannuation Contributions. Note if you have a few employees this is something you will need to consider when budgeting for 2015.
  3. Super Guarantee rates will however remain at 9.5% for the next 3 years.
  4. Company Tax Rates are cut by 1.5% to 28.5% from the 1st July 2015. This means someone with a profit of $100,000 will pay $1,500 less in tax each year.
  5. R&D Tax Incentive has decreased by 1.5% that will come into effect from the 1st July 2014
  6. Fringe Benefits Tax Rate will increase to 49% (up from 47%) from 1st April 2015
  7. Medicare Levy goes to 2% (up from 1.5%) from the 1st July 2014. Ie if you earn $80,000 a year you will pay an extra $400
  8. Medicare Levy Surcharge kicks in at $88,000 for Singles and $176,000 for couples. This kicks in at 1% then increases to 1.25 or 2% depending on your Income. Ie it's a good idea to ensure you are covered by Private Health Insurance.
  9. HELP thresholds will change from 1 July 2016. You will start to repay any HELP debts at $50,638 at a rate of 2%.
  10. HELP Debt Interest will rise up to 6%. This will be in line with the 10 year bond rate. Ie the Interest accumulating on your HELP debt each year will rise.
  11. We will be paying more at the bowser

What has been abolished:

  1. Mature Age Workers Offset is now gone. This was $500 for anyone who worked and was over age 55.
  2. Dependant Spouse Offset is now gone as well
  3. Tools of the Trade Apprenticeships Program has been scrapped. This program is being replaced with a Trade Support Loans Program which will give Apprentices a loan of up to $20,000 over a four- year apprenticeship. This will need to be paid back when the taxable income gets to $53,345. The good news is this loan will be reduced by 20% when the Apprentice completes their training.
  4. Commercialisation Australia Program has been abolished.
  5. Innovation Investment Fund has been abolished.

What are the changes to Welfare

  1. Family Tax Benefit Part B threshold will be reduced from $150,000 to $100,000
  2. A Low Income Allowance of $750 will be paid for single parents
  3. Family Tax Benefit Part B will be stopped when your youngest child turns 6. Transitional measures exist till 1 July 2015.
  4. Family Tax Benefit payments will stay the same (not indexed)
  5. The threshold for Paid Parental Leave will be capped at $100,000, meaning the maximum you can receive is $50,000
  6. Young People (under 30) will only be able to claim Newstart or Youth Allowance for 6 months of the year and will need to participate in 25 hours of work for the dole if not studying.
  7. Pension Age will increase to 70 from 1st July 2035. Ie anyone who was born after 1965 will not receive the age pension until age 70. NOTE this is the age pension and does not apply to Self Funded Retirees.
  8. Seniors Australians will not receive the supplement anymore.

A few things we think will be good for SME's

  1. Entrepreneurs Infrastructure Fund has been established. Further details on this program are expected to come over the next few days.
  2. Restart Program for Older Australians will kick in. If you employ someone over 50 who has been on unemployment benefits or Disability Support for 6 months you can receive a payment of up to $10,000
  3. Medical Research Future Fund will be the biggest research endowment fund in the world within 6 years
  4. Infrastructure has been given a huge boost

Overall a few small tax changes but nothing of a fundamental nature. If you want to see how these changes affect you exactly has a neat little calculator or if you want to know where your tax money is going you can see that here. The big news is we are still waiting on confirmation re other Tax Measures that have been on hold due to the Mining Tax Repeal. This directly affects all Small Business Owners so we will keep you updated as things unfold. For all the Growthwise Clients we will be embarking on your Tax Planning over the coming weeks :) Any questions at all re the Budget jump on our Facebook page or shoot us an email.