2014 BUDGET REPORT SUMMARY

This year’s budget only obtained a few tax and superannuation measures.

PERSONAL TAXATION

• Temporary budget deficit levy (tax) of 2% to apply for 3 years from 1 July 2014 on individuals’ taxable income in excess of $180,000 pa.

• As currently legislated, plus including the newly announced temporary debt levy, the personal income tax rates and thresholds are summarised for resident taxpayers in the table below (note that these rates do not include the Medicare levy, currently 1.5%, but to rise to 2% from 1 July 2014) :

Personal Income Tax Rates and Thresholds

             2013-14                           2014-15                       2015-16 and 2016-17

             Threshold   Rate            Threshold   Rate            Threshold   Rate

1st rate  $18,201     19.0%         $18,201      19.0%           $18,201     19.0%

2nd rate $37,001     32.5%         $37,001      32.5%           $37,001     33.0%

3rd rate $80,001     37.0%          $80,001     37.0%            $80,001     37.0%

4th rate $180,001   45.0%          $180,001   47.0%            $180,001   47.0%

• With Medicare levy included, the top marginal rate would be 49% from 1 July 2014 to 30 June 2017.

• The Government will reduce the Family Tax Benefit Part B (FTB-B) primary earner income limit from $150,000 per annum to $100,000 per annum, from 1 July 2015. It will also be limited to females whose youngest child is younger than 6 from 1 July 2015.

• Dependent spouse tax offset will abolished for all taxpayers from 1 July 2014.

• Mature age worker tax offset will be abolished from 1 July 2014.

• The Age pension qualifying age will continue to increase by 6 months every 2 years, so that it will reach a qualifying age of 70 by 1 July 2035.

BUSINESS TAXATION

• The Government confirmed it was committed to cutting the company tax rate, for small and medium businesses, by 1.5% (to 28.5%) from 1 July 2015.

• The start date of the new tax system for managed investment trusts will be deferred to 1 July 2015.

• To prevent high income earners from utilizing fringe benefits to avoid the levy, the FBT rate will be increased from 47% to 49% from 1 April 2015 until 31 March 2017 to align with the FBT income year.

• The rates of refundable and non-refundable R & D tax offsets will be reduced by 1.5% to 43.5% and 38.5% respectively, from 1 July 2014.

• The small business entity $6,500 asset write-off is still in limbo. The Governments proposed amendment to cut this to $1,000 from 1 January 2014 has not been passed and therefore the $6,500 write-off still stands.

SUPERANNUATION

• The Government will allow individuals the option of withdrawing superannuation contributions in excess of the non-concessional contributions cap made from 1 July 2013 and any associated earnings, with these earnings to instead be taxed at the individual’s marginal tax rate.

• Super Guarantee rate of 9.5% from 1 July 2014. The SG charge percentage will then increase by 0.5% each year until it reaches 12% from 2022-23.